Patna High Court
Commissioner Central Excise,Pa vs M/S Universal Polythelene Indu on 12 September, 2008
Author: Chandramauli Kr.Prasad
Bench: Chandramauli Kr. Prasad, Ravi Ranjan
TAX CASE No.2 OF 2001
In the matter of an application from the Order No.A-852/Cal/2000 dated
30.6.2000passed by Smt.Archana Wadhwa, Member (Judicial) and Dr.S.N.Busi, Member (Technical) of Custom, Excise & Gold (Control) Appellate Tribunal in Appeal No.E/R-307/98 (Commissioner Central Excise, Patna Vrs. Universal Polythene Industries) arising out of order in Original No.01/MP/Commr./97-98 dated 21.4.97 passed by the Commissioner of Central Excise, Patna.
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COMMISSIONER CENTRAL EXCISE,PATNA-------------Applicant Versus M/S UNIVERSAL POLYTHELENE INDUSTRIES----------Respondent
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For the Applicant : Mr.Rakesh Kumar Singh, Central Government Cousel.
For the Respondent : None.
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PRESENT THE HON'BLE MR. JUSTICE CHANDRAMAULI KR. PRASAD THE HON'BLE DR. JUSTICE RAVI RANJAN
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Prasad & M/s Universal Polythene Industries, Patna Ranjan, JJ:
manufactures ACSR Squirrel Conductors. The production figures for the year 1989-90 in RT-12 returns show manufacture of ACSR Squirrel Conductors to the extent of 102.150 kilometers only. However, in the balance sheet for the year 1989-90, it was found that M/s Universal Polythene Industries had manufactured ACSR Squirrel conductors to the extent of 332.150 kilometers. Thus, Universal Polythene Industries, Patna had suppressed production to the tune of 230 kilometers. Similarly, the production of ACSR Squirrel Conductors was shown as 304.630 kilometers in the balance sheet for the year 1990-91, whereas in the RT returns for the 2 same period it was shown as 260.370 kilometers. In this way according to the Central Excise Authorities, the manufacturer suppressed the production to the tune of 44.260 kilometers and the duty evaded on these accounts comes to Rs.2,89,772.
In the opinion of the Central Excise Authorities, the removal of the ACSR Squirrel Conductors to the extent indicated above is nothing but clandestine removal. The Commissioner, however, observed that in the absence of any corroboratory evidence, the charge of clandestine removal is not fit to be accepted and, accordingly, it dropped the charge. The appeal preferred by Central Excise Authorities against the aforesaid order has also failed, and Customs, Excise and Gold (Control) Appellate Tribunal, Calcutta by order dated 30.6.2000 dismissed the appeal.
Aggrieved by the same, the Commissioner of Central Excise has filed this reference under Section 35-H of the Central Excise Act, 1944.
By order dated 25.2.2003, this Court directed the Customs, Excise and Gold (Control) Appellate Tribunal to draw up statement of case and refer the following question of law for determination :-
"Whether the balance sheet of a factory prepared by a professional, qualified Chartered Accountant, a legally recognized certificate holder with the Institute of Chartered Accountants in terms of the Company Act on the basis of facts and figures so provided by the respondent can be ignored on irrelevant and arbitrary grounds ?3
In the light of the aforesaid order, the Tribunal had referred the aforesaid question for determination.
Mr.Rakesh Kumar Singh, Central Government Counsel submits that the balance sheet of the manufacturer i.e. Universal Polythene Industries having been prepared by a professional, qualified Chartered Accountant recognized by the Institute of Chartered Accountants in terms of the provisions of the Company Act, same was not fit to be ignored. He submits that the balance sheet is prepared by the Chartered Accountant on the basis of the materials furnished by the manufacturer.
Despite service of notice on the respondent, nobody has chosen to appear on its behalf.
There is discrepancy in the production figures between the balance sheet and RT-12 returns. The Central Excise authorities on that basis charged the manufacturer for clandestine production and removal of goods. However, the Commissioner in appeal dropped the charge and said order has been affirmed in appeal by the Custom, Excise and Gold (Control) Appellate Tribunal.
We are of the opinion that in case of discrepancy between the balance sheet prepared by the qualified Chartered Accountant and RT-12, as a proposition of law it cannot be said that it is the balance sheet which will prevail. It will depend upon the facts and circumstances of each case. In the facts of 4 a given case, RT-12 may prevail. Similarly in case of conflict, in a particular case the balance sheet may prevail. In case the manufacturer come out with plausible explanation and assigns valid reason for showing higher production in the balance- sheet, the later may be accepted. In our opinion both are pieces of evidence and which deserve acceptance is to be decided on the basis of further material available. There is no material to suggest that the manufacturer had manufactured the quantity as shown in the balance sheet, then what has been shown in RT-12 returns. The Tribunal as also the Commissioner has noted the common feature that manufacturers show inflated figures of its production in the balance-sheet for taking higher loan facilities from the Bank and accepted the plea of the manufacturer.
Accordingly, we are of the opinion that the balance sheet prepared by the Chartered Accountant can be ignored on relevant and good grounds. The grounds assigned by the Commissioner as also the Tribunal are good and valid grounds. We are of the opinion that the balance sheet prepared by the qualified Chartered Accountant is not conclusive proof in regard to the production.
Accordingly, we answer the reference against the department and in favour of the assessee and it is held that the balance sheet prepared by the Chartered Accountant was not ignored on irrelevant or arbitrary grounds. 5
The reference is answered accordingly.
Tax case stands disposed off.
(Chandramauli Kr.Prasad, J.) (Dr. Ravi Ranjan, J.) Patna High Court Dated, 12th of September,2008.
NAFR/Narendra/