Customs, Excise and Gold Tribunal - Delhi
Ludhiana Food Products vs Collector Of C. Ex. on 28 June, 1989
Equivalent citations: 1989(25)ECR402(TRI.-DELHI), 1989(43)ELT648(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. In this appeal, the appellants have challenged the order of the Collector of Central Excise, Chandigarh in Order-in-Original dated 7-2-1986 demanding duty of Rs. 1,00,257/- and imposing penalty of Rs. 50,000/-.
2. The appellants M/s. Ludhiana Food Products is a partnership firm engaged in the manufacture of biscuits falling under erstwhile tariff Item 1 C. During the year 1983-84, the appellants were availing the small scale exemption from the whole of duty of excise on their biscuits upto the value limit of first clearance of Rs. 7.5 lakhs during a financial year as provided under Notification No. 80/80-CE dated 19-6-1980.
3. On 8-3-1984, the Central Excise Preventive officers of Chandigarh intercepted at Ludhiana one Tempo carrying different varieties of biscuits valued at Rs. 6,321.26 P. from the appellants factory. Investigations were made, books seized and statements recorded and show cause notice dated 4-9-1984 issued under Rule 9(2) and under Rules 173Q and 226. After the proceedings, the Collector of Central Excise, Chandigarh passed the impugned order which is challenged in this appeal.
4. The learned Counsel for the appellants Smt. Archana Wadhwa, vehemently argued for the remand of the case for giving them an opportunity to cross examine the accountant as the entire findings of the learned Collector is based on the private note book written by the said accountant who has not been examined nor his statement recorded at the time of the raid of the investigating party. The Counsel has argued that the said accountant was in eniminical terms with them, in that, he had deliberately planted the said note book to trap the partners of the appellant firm and it is at his instance the raid had been done. The partners of the appellants firm had sought for his presence for cross examination but the learned Collector had failed to summon him and hence the proceedings are vitiated on that account, as the principles of natural justice required that a full opportunity should have been afforded to them to establish their innocence, bona fides and to prove that the said private note book is manipulated one, by their accountant, planted in the books to trap them. They have filed a suit for recovery of sums against the accountant and that he is also no longer in their service, that he has also filed claims petition under Sec. 33C(2) of Industrial Disputes Act for recovery of salary dues before Labour Court, as they had refused to settle his wages on account of his misappropriation of sums collected from their seven customers. The counsel further argued that the Investigating team has further committed a serious mistake in recording the statement only seven parties, who were their customers whose names were mentioned in the note book but failed to record the statement of others, whose names were also mentioned in the note book which is highly motivated act and done with vindicative attitude and with mala fide intentions by the Investigating team of the Deptt. and had been done solely with a view to reek vengence at the instance of the accountant.
5. We have carefully examined these contentions of the appellants' counsel but fail to agree with the said submissions and tend to agree more with the reasoning accorded by the learned Collector not calling the accountant for cross examination and also agree with him that they have not been denied with any principles of natural justice and that there has been no violation of the same and that they had been given full opportunity to defend themselves in which they have failed to establish their case fully. We notice from the findings and record the following facts, which do not call for any remand of the case as sought for by the appellants counsel as sufficient grounds do not exist for such a remand, also from the point of the well laid down law on this question.
6. As can be noticed from the facts, the vehicle bearing No. PKG-1661 carrying a consignment of biscuits of various varieties valued at Rs. 6,321.26 P. was intercepted by a team of Headquarters Central Excise Preventive staff, Chandigarh which was not accompanied by any genuine bill/voucher. Immediately, the staff visited the factory premises of the said M/s. Ludhiana Food Products, Ludhiana and could recover certain documents which included a private exercise book which was lying in the office of the firm and was suspected to contain incriminating enteries showing the sales of biscuits to different parties without any account and without payment of C. Ex. Duty. Besides this private exercise note book, they have also seized (a) RGI Register (stock register from April 1983 to Dec. 1983 (b) office copies of bills showing the sale of biscuits and sweets. The entire records were thoroughly subjected to scrutiny and it was discovered that the sales of biscuits manufactured by the firm during the year 1983-84 was as under:-
i)Sales as per RG-I Register from 1-2-1983 -Rs. 2,31,086.75
ii) Value of biscuits removed from factory clandestinely - Rs. 13,67,649.80 as per exercise book from 2-12-1983 to 1-3-1984 ____________________ Rs. 15,98,736.55 which was much more than the exempted limit of Rs. 7.5 lakhs. Thus the appellants had been evading Excise duty on the excess and clandestine clearances valued at Rs. 8,48,786.55 P. attracting Central Excise Duty to the tune of Rs. 95,482.86 P. as BED and Rs. 4,774.14 P. as SED totalling to Rs. 1,00,257/-.
7. The team made a close scrutiny of the private note book and on the basis of the information collected from it, recorded the statement of the parties who had purchased the materials. The parties admitted having purchased the same without bill on cash basis. The team seized such stocks which they had purchased. Shri Jeet Singh, partner of the firm, who was present at the time of the visit of the staff of the factory, handed over personally the records including the private note book but did not explain any thing about the records seized. However, he stated that other partner sh. Gurdar-shan Singh who was looking after the maintenance of records etc. would be in a position to explain later. The Investigating team had summoned Sh. Gurdarshan Singh again and again but he had been evading to come and give statement on one pretext or the other. Ultimately, on 16-7-1986, he appeared before the Superintendent (Preventive), Central Excise, Chandigarh. He was shown with the relevant records and after seeing the same, he tendered the statement in which he confessed about the short titles of the brand names of biscuits and rates thereof written in the sales bills which tallied with the entries in the private note book.
8. He further explained the contents of the private note book and the signature of the other partner Sh. Jeet Singh on first and last page of the said impugned note book. He had also produced several other records. The copies of the relied upon documents were supplied to the appellants and they were asked to inspect the records on 4-3-1985. However, the counsel for the appellants had sought for another date to inspect the documents. He was directed to inspect the records between 8-4-1985 to 12-4-1985 and a personal hearing was fixed on 17-4-1985. On 17-4-1985, the counsel appeared before the Collector and sought for the copies of the document and the same was supplied to him on 22-4-1985 and was asked to examine the records between 17-6-1985 to 19-6-1985 and further they were asked to cross examine the signatures of Sh. K.L. Dhawan, Raj Kumar Kaushik and Ganesh Lal, Inspectors on 5-7-1985. On this date, the counsel appeared and sought for the presence of the officer who had investigated the case for cross examination and also sought for summoning their accountant for cross examination. However, on this day, the Collector informed him that his request to cross examine their accountant Sh. Ved Prakash could not be complied with as he was not a prosecution witness nor his statement recorded nor relied upon, hence the case was adjourned to 17-9-1985. The counsel appeared on this date but sought permission to file their documents and written arguments at a later stage but to permit them to submit their oral submission on 27-9-1985. They cross examined Sh. Raj Kumar, Inspector who had investigated the case. On 27-9-1985, the counsel filed his written arguments and sought for release of seized goods unconditionally and also for dropping of the proceedings.
9. The show cause notices were served on M/s. Ghai Di Hatti M/s. Karnal General Stores but they failed to submit their replies. M/s. Darshan Singh Pritam Singh had sought for copies of documents and personal hearing. He was asked to contact the Asstt. Collector and collect copies of documents from him. The case was fixed for hearing on 11-11-1985 and this date of hearing was informed to the party and his counsel. But the party sought for an adjournment by letter which was granted and a fresh hearing was fixed for 22-11-1985. The date of hearing was duly intimated. But however, the letter of hearing was returned unserved with endorsement "Refused hence returned to sender". As none appeared on this date, the Collector closed the hearing and on the basis of the available material and taking into consideration all the relevant facts and circumstances had passed the impugned order.
10. What emerges from these facts is that the appellants had put forth their written submissions on 12-9-1984 to the show cause notice dated 4-9-1984. In this reply dated 12-9-1984, the counsel had signed the reply on behalf of the appellants. The counsel had submitted that a detailed reply to. the notice could not be filed unless they were supplied with all the documents and had sought for cross examining the Investigating officer and to be heard in person. The counsel or the appellants had neither sought for cross examining their Accountant Sh. Ved Prakash nor they had stated in their replies, that the said private note book being a manipulated document placed in the records by their accountant for trapping them. Even in their letter dated 26-6-1985, they have not made known about this fact except to seek permission to cross examine Sh. Ved Prakash. The Counsel had only cross examined the Inspecting officer Sh. Raj Kumar on 17-9-1985. In this cross examination, no question was posed to him to support that this private note record was planted by the said accountant to trap the partners. The detailed written arguments have been submitted on 26-9-1985 signed by the advocates and for the first time, it is submitted that the scribe of the private note book Shri Ved Prakash, Accountant was not examined by the Investigating officer and hence the entire proceedings are vitiated.
11. The fact remains that when the Investigating officer raided the factory, the records were presented to the Investigating officer by the partner of the appellants firm namely Sh. Jeet Singh on 8-3-1984. The other partner Shri Gurdarshan Singh was examined on 16-7-1984. In his statement he has admitted the signatures of Shri Jeet Singh on first page and on the last page of the impugned private note book. He had further stated that "the accounts are generally maintained by our accountant Sh. Ved Prakash and entries in the said note book appears to have been made by him". Further, he has stated that "I have gone through the said note book. It appears to have been containing entries of the description of goods as given in our sale bills of biscuits shown to me". Further, he has stated "with reference to the description of biscuits shown in the sales bills the prices charged in our bills tally with the value given in the said note book". The said partner Sh. Gurdarshan Singh had also produced several other documents, bills etc. of which entries were tallying in the private note book. He has not stated either in his voluntary statement or later at any time that this private note book is a handy work or manipulation of their accountant to trap them nor he has disowned it. He has explained the entries in the note book with bills and admits the entries and also states that the accounts were written by their accountant Sh. Ved Prakash.
12. They have not filed any police complaint against the said Shri Ved Prakash against the alleged false book kept in the books to trap them. He has not been charge sheeted for misconduct nor punished. Even in their plaint filed against him before Senior Sub Judge Ludhiana for recovery of Rs. 11,178/-, they have not stated that he had fabricated this note book to trap them. They have filed the suit on 19-7-1985 much later date to the date of raid. They have produced the copy of his application dated 28-5-1984 under Section 33-C(2) of Industrial Disputes Act filed before the Presiding officer, Labour Court, Ludhiana in which he has claimed to be a workman seeking wages w.e.f. November 83 to 31st March 84. It follows that he had not been paid salary from November 83. The date of raid is 8-3-1984. The statement of the appellants that the accountant Sh. Ved Prakash had manipulated the said note book as he nursed ill will against them on account of disputes between them, cannot be believed, as the said worker/accountant had not been paid salary from November 83 to March 84 for which he filed an application in Labour Court only on 28-5-1984 and the suit had been filed on 19-7-1985, almost one year four months after the raid. There was no dispute as stated by them as on the date of raid. It is also not possible to believe that against a person with whom dispute is pending, that person would be made to write accounts or deal in sales and hold responsible position in factory. It is further difficult to believe that biscuits worth Rs. 11,178/- would be entrusted to him for free distribution. The partners in their statement have not stated that his salary had been withheld, and he had sold samples and that he was nursing a grouse against them. Even in their reply dated 12-9-1984 & 26-6-1985, these facts have not been denied nor they have disclosed about the alleged said conduct of the accountant. The counsel by his written arguments dated 26-9-1985 filed after the cross-examination of the Inspector Sh. Raj Kumar has disclosed about the manipulation of the note book by their accountant for the first time. There is not a single question posed in the cross examination of Sh. Raj Kumar that this note book was a manipulated document except to put a suggestion which has been denied that Sh. Ved Prakash had handed over the note book and that he was present when the party went to seize the books. The Inspector Sh. Raj Kumar has denied that such a person was present or such a person disclosed his identity. He has stated the records were handed over by partner Sh. Jeet Singh.
13. The appellants by their partners Sh. Jeet Singh or Sh. Gurdarshan Singh had not stated till the time of filing their written arguments that the said private note book is a manipulated handy work of their accountant, Sh. Ved Prakash. Any denial has to be specific and clear. Even a vague or evasive denial is not a denial. Further if a party has not raised a denial at an earliest point of time and remained silent for a long time and failed to disclose his defence and resiles from his statements after a long period of time then he is deemed to have no defence and such resilement made after a long lapse of time is not allowed to be withdrawn, but instead it means he has admitted the facts. It is well settled that admitted facts need not be proved. In the instant case, the private note book has been surrendered by Sh. Jeet Singh. Sh. Gurdarshan Singh after four months confirms the signatures of Sh. Jeet Singh in first and last page of the private note book and also confirms the entries of the bills in the said note book. It is an admitted document. In view of these circusmtances, it is difficult to believe that the said private note book has been manipulated handy work of a disgruntled employee. It is pertinent to point out that if at all there was a dispute, it has arisen on 28-5-1984 on which date the said accountant filed his claim petition and on 19-7-1985 on which date they have filed a suit for recovery of sums. It appears to us that this defence is an 'after thought' and the Collector was justified in disbelieving their version. We do not see any denial of natural justice in non-examining the scribe of the private note book nor in his not being summoned for cross examination. The partners had produced the private note book themselves, one of this signature is found in first and last page, the entries in it are confirmed and they have explained the contents also. It follows that the same is got written by them. They have checked and found the entries correct by them. They have remained silent for a long time and no suggestion or manipulation is also put in the cross examination of the Inspector but for the first time, they stated so in their written arguments put forth by their advocate which appears to us to be a make belief story and nothing more. There is no infirmity in the proceedings before the Collector. We find that they have been granted with full and fair opportunity and that they have failed to examine themselves as a witness before the Collector nor have they produced any evidence to disprove the charges in the show cause notice. Their non-examination as witness and to produce any evidence in their favour is another circumstance against them. The appellants have not made any other ground to set aside the orders of the Collector. In the result the appeal fails and the same is dismissed.
14. However, we find that the penalty of Rs. 50,000/- is severe and hence the same is reduced to Rs. 10,000/- only.
The appeal is dismissed with modification only to the extent of penalty impose.