Custom, Excise & Service Tax Tribunal
Hindustan Rubber Factory vs Commissioner Of Central Excise, ... on 16 April, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No . 20565 / 2014 Appeal(s) Involved: E/720/2003-SM [Arising out of Order in Appeal 169-2003 dated 06/06/2003 passed by Commissioner of Central Excise(Appeals) , MANGALORE] Hindustan Rubber Factory 326, Dharwad Road, BELGAUM KARNATAKA 590003 Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax - BELGAUM NO. 71...CLUB ROAD, CENTRAL EXCISE BUILDING, BELGAUM, KARNATAKA 590001 Respondent(s)
Appearance:
Shri N. Anand, Advocate K. S. Ravi Shankar No. 152(18), Race Cource Road, Bangalore, Karnataka 560001 For the Appellant Shri S. Teli, Deputy Commissioner(AR) For the Respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER Date of Hearing: 16/04/2014 Date of Decision: 16/04/2014 Order Per : B.S.V.MURTHY The Appellant is a partnership firm engaged in manufacture of tread rubber falling under Chapter heading No.4006.10 of the First Schedule to the Central Excise Tariff Act, 1995 and is duly registered as manufacturer holding central excise registration No.45/94 and has been clearing its manufactured final product on payment of appropriate duty of excise and also filing periodical returns viz., RT12 returns.
2. On 10.11.1995 the Departmental officers visited the factory premises of the Appellant and conducted physical verification of final product and found that RG1 register showed balance stock of 7,762.78 kgs and whereas the physical stock available and showed by Mrs. Mary Alvares, the representative available in the factory on the said date was only 1,080 kgs. Hence, the Department noticed shortage of physical stock of final product of 6,682.78 kgs. Further the Departmental officers took into custody various documents including a diary (red color). This is based on the statement deposed by Mrs. Mary Alvares on 10.11.1995 (at p.163, Annexure W to appeal paperbook). Subsequently on various dates between 15.11.1995 to 12.3.1996 the Department took statements under section 14 of the Act from 11 parties/customers the details of which are given in the show cause notice at p.44 of the appeal paperbook. The brief narrative or summary of the statements deposed by all the 11 parties/customers are tabulated below
1. Dilipshankar Rao, Proprietor of Mahesh Tyres, Karad 15.11.1995 Purchased tread rubber under 7 invoices detailed in the statement (copies were shown to the department) and the payments were made by cash on various occasions and sales were effected from their depot.
2. Bhagwan Sadhu More, Datta Tyres, Miraj 15.11.1995 Tread rubber was purchased vide 3 invoices detailed therein and payments for all the three invoices were made by cheque details are shown alongside the invoice/consignments. Not made any other purchase from Hindustan Rubber Factory or their dealer.
3. Devegouda Jinappa Kothali, Gokul Tyre Retreaders 15.11.1995 Hindustan Rubber Factory supplied tread rubber at their factory by their own delivery vehicle and those transactions were made by cash and whenever they ask for invoice/bills they assure that bills will be sent afterwards but hardly they kept up their assurances. The details of purchases/deliveries on 6 occasions are detailed at p.124 and except for one consignment which was supported by invoice, the other 5 consignments there was no invoice/bill details. Stopped doing business with Hindustan Rubber Factory.
4. Ashok N Hanumsagar, Ashok Tyre Works Hubli 15.11.1995 I have purchased tread rubber from Hindustan Rubber Factory with invoice and paid money in cash. Handed over the copies of invoices for goods purchased. The details of purchase of tread rubber made from Hindustan Rubber Factory are given in the table. Totally 7 invoices with invoice details, quantity and values were given.
5. M.L.David, Star Tyres 24.11.1995 Purchased 60kg tread rubber valued Rs.4,200/- from Hindustan Rubber Factory through agent and paid Rs.4,200/- in cash and the agent gave simple receipt which does not bear any number or signature or name of the supplier. No other purchases have been made from Hindustan Rubber Factory
6. Harish Naik, Sai Tyres 15.11.1995 They are only commission agent and not purchased thread rubber from anybody from Belgaum. However, they purchased 295kgs of thread rubber valued Rs.47,905/- from Hindustan Agencies, Kolhapur vide their invoice No.8/95 dated 22.9.1995 (Xerox copy furnished)
7. Pravin Kumar C.Patel, Deluxe Tyre Remold 16.11.1995 During the period 1.5.1995 to 22.6.1995 purchased 310.64kgs of tread rubber valued Rs.27,036 from Hindustan Rubber Factory and paid in cash to their agent. The above amount is paid as per Bill No.53 issued by Hindustan Rubber Factory. The copy of the bill or original is not available but misplaced during diwali accounting.
8. P Mani, Indian Tyres 8.1.1996 Only once purchased tread rubber (9 rolls, 265 kgs) from Hindustan Rubber Factory vide invoice No.43/95 dated 31.7.1995 and original copy of the invoice was produced. No other transaction except the one above was entered into with Hindustan Rubber Factory.
9. A.J.Chalicham, Prakash Tyre Works 8.2.1996 Purchased 3 rolls of tread rubber under invoice No.35/95 dated 18.6.1995 and amount paid for the said purchase vide Cheque No.524825/18.6.1995. Original copy of the bill was produced before the department.
10. M.K.Kulkarni, Poly Sales Corporation 13.2.1996 No purchase of tread rubber made from Hindustan Rubber Factory
11. M.K. Navi, Sanjeev Tyres Services 12.3.1996 Purchased rubber from Hindustan Agencies, Kolhapur and not from Hindustan Rubber Factory, Belgaum
3. Subsequently on 20.10.1996 and 20.1.1997 the Department obtained statement from Mr. Mustafa Khan, the Manager of the Appellant which are enclosed at pp.156 to 159, Annexure V of the appeal paperbook. In the said statement, the Manager denied the allegation of any shortage of physical stock of final product; that he was out-of-station as on the date of visit to the Appellant factory i.e. on 10.11.1995; it was explained that RG1 register was incomplete inasmuch as clearances effected by invoice nos.57 to 60 totalling involving 4,435 kgs were not entered in the removal column of RG1 register; that the fact was that balance short quantity of tread rubber i.e. 2,247.78 kgs was kept in semi-finished stage ready for extruding and this quantity was not shown to the Department at the time of physical verification by Mrs. Mary Alvares and she did not satisfactorily explain for the same; further to various questions put forth by the Department answers were given to the Department and facts were explained in detail. Mr. Mustafa Khan, Manager did not accept anywhere in the deposition statement that there was any clandestine removal. Further as regards the question pertaining to diary, it was answered that he was not aware of the diary and sought for copies of the so-called diary in order to enable him to verify the same. Subsequently, in his statement dated 20.1.1997 he stated that only a few entries may be there which were not reflected/shown to the department and on such entries he stated that he was willing to pay duty. The Department issued a show cause notice vide C.No.V/40/15/24/98-Adjn dated 16.12.1998 and alleged that the department noticed shortage of physical stock of final product of 2,247.78 kgs and no convincing explanation was given for the said shortage and that during verification the Department embarked upon a diary which showed clearances for the year 1994-95 and 1995-96 other than those reflected in statutory records and after follow-up action with some customers of the Appellant, the investigation corroborated the fact of clandestine removal either on parallel set of invoices or without any invoices and without payment of duty. Based on this it was alleged that the Appellant had suppressed the production and clearance of tread rubber during the year 1994-95 and 1995-96 involving duty of Rs.81,781/- as computed in Annexure I & II to the notice which were either without invoices or on a parallel set of invoices.
4. This is the second time the matter is coming before the Tribunal. On the first occasion on 18/07/2008, this Tribunal had passed ex parte Final Order No.720/2008 and allowed the appeal on the ground of limitation. On an appeal filed by the Revenue, Honble High Court of Karnataka disposed of the appeal by the judgment dt. 25/05/2012 and held that the Tribunal did not discuss the facts in order to appreciate whether the judgment of Nizam Sugar Factory is applicable to the present case or not and the matter was remanded back for fresh consideration. Today the learned counsel took me through the facts of the case as discussed above. He submitted that the investigation was completed on 21/09/1997 whereas show-cause notice was issued on 16/12/1998 and therefore the show-cause notice is time-barred. I am not able to accept this submission in view of the decision of the Honble High Court of Gujarat in the case of CCE, Surat-I Vs. Neminath Fabrics Pvt. Ltd. [2010(256) ELT 369 (Guj.)] wherein the Honble High Court has taken the view that what is relevant is whether there is suppression of facts, mis-declaration etc. and not whether Department was aware of it and whether investigation was complete etc. That being the position, on limitation, it cannot be said that the appellant has a case.
5. The second submission made by the learned counsel was that the demand of duty is based on assumption and presumption. He submitted that the total quantity of tread rubber cleared as the red diary recovered from the factory has been considered as removed clandestinely and duty demanded. He submits that this cannot be sustained in the absence of any statement from the author of the red diary and in the absence of any admission on the part of any officers of the company/firm admitting that the clearances in red diary were made without payment of duty. He draws my attention to the statement of Shri Mustafa Khan who had clearly stated after seeing the photocopy of the red diary that he was willing to pay duty on the quantities cleared as per the red diary for which there is no corresponding entry in statutory records. No such verification with statutory record has been made. In the absence of any admission to the fact that entire clearances in red diary were without payment of duty, the demand cannot be sustained. He also submitted that the statement of all the receivers of goods as per annexure 1 & 2 of the show-cause notice has not been recorded and even in the statements recorded from 11 customers, many have stated that they have received goods under invoices and paid the consideration by cheque. He submitted that some customers have stated that they had no dealings with the appellant at all. Learned AR submitted that the red diary seized has not been challenged; its recovery has not been challenged; the original adjudicating authority had made specific observations about parallel invoices and at least in the case of one customer viz. M/s. Prakash Tyre Works, Kolhapur, there is no challenge to the observation that there were parallel invoices; other specific instances brought out by the original adjudicating authority have also not been challenged. The above facts brought out would show that neither side has been able to show as to what exactly is the quantum of clandestine removal. The assessee should have submitted a statement showing the exact quantity in the red diary which was shown as cleared as per statutory records and arrived at the quantum of differential duty which they have not done. The observations of the original authority and citation of specific instances by him have also been left unchallenged. On the other hand, Department also in spite of the statement of Shri Mustafa Khan that certain portion of the red diary have been cleared on payment of duty and further he was not admitting the entire clearances in red diary as clandestine removal, no efforts have been made to quantify the exact quantum of tread rubber cleared without payment of duty. In such a situation, both sides have failed to make out a case in their favour in accordance with their submissions.
6. It will be unfair on my part to either uphold the entire demand or to adjourn the matter for further quantification in view of the fact that the case relates to the year 1995-96 and the matter is coming before this Tribunal for second time. Under these circumstances, keeping the total amount involved for consideration and the facts as discussed above, in my opinion, it would be appropriate if the assessee is required to pay the duty on the quantity found short at the time of visit of the officers. Both sides agree that the amount would come to Rs.13,487/-. Accordingly, the duty demand of Rs.13,487/- is confirmed and appeal is decided in above terms with consequential relief, if any, to the appellant.
(Operative portion of the order pronounced in open court) B.S.V.MURTHY TECHNICAL MEMBER Raja.
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