Customs, Excise and Gold Tribunal - Mumbai
Bil Metal Works vs Commissioner Of Central Excise on 3 January, 2001
Equivalent citations: 2001(75)ECC102, 2002(148)ELT554(TRI-MUMBAI)
ORDER J.N. Srinivasa Murthy, Member (J)
This appeal is preferred by the above appellant, against the above-captioned Order-in-Appeal No. CS-47/BRD/95 dated 30.3.95 praying for setting aside the same.
1. The brief facts of the case are appellant manufactures Auto Parts falling under sub-heading No. 8708.00 of Tariff Act, holding L-4 Licence No. 23/AOG/79 of Central Excise. On 22.7.91 the Central Excise Officers of Range VI Divn. II, Vadodara during Transit check near Atladra Octroi Naka, intercepted a tempo with Registration No. GJ-6-T-5123, and verified the documents and noticed 16 wooden boxes were in conformity with Gate Pass No. 152 dated 20.7.91, and on verification of delivery note no. 489 dated 20.7.91, Six packages consisting some samples were being carried without any valid Central Excise Documents. Driver of the Tempo Sri Ashok Kumar Shah on enquiry stated that he had been to appellant factory at about 4.30 hours. On verbal request of Sri Omprakash Singh being a part loading contractor, and on verbal request of owner M/s. Radhashami Transport for lifting the above goods and to unload at Harni Octroi Naka, he brought them. For further probe, they visited appellant factory, and found it was closed on a weekly holiday. Security staff, on enquiry stated that no body was available to explain thoroughly about the matter and they had been directed by the management to get the tempo loaded for despatch of said goods and they had been given GP No. 152 dated 20,7.91 and delivery challans on 485 to 489 dated 20.7.91 and also followed by a Inspection Report dated 19.7.91 and Chit No. 78 of 20.7.91. It gave doubt about of genuineness of such type of removal as overwriting, Scoring was made, in the chit. They brought the Tempo alongwith goods to Headquarters office of Central Excise and detained by Superintendent, Central Excise (Preventive) Headquarters, Baroda for further investigation after recording the statement under Section 14 of Central Excise Act of the above tempo Driver on 23.7.91, after physical verification of goods loaded in the tempo, Panchanama was drawn in the presence of PH. Patel, Accounts Assistant of appellant factory. It was noticed that goods mentioned in GPI No. 154 dated 20.7.91 and delivery challan were found tallying with actual description. But, six cartoons mentioned at Sr. No. 5 & 6 in the Annexure of Panchanama were found without Central Excise documents for clearance of said goods from the factory. Sri Patel produced GPI No. 159 dt. 22.7.91 for these goods before Panchas. His statement under Section 14 of Central Excise Act was recorded. Itrevealed excisable goods valued at Rs. 1,17,533.50 along with tempo valued Rs. 3,00,000.00 were seized under Panchanama dated 24.7.91 in the presence of J.M. Shah, Senior Manager (Administration) of appellant factory and Excise Assistant Sri PH. Patel, under a reasonable belief that the said goods are of an offending nature and liable for confiscation under Central Excise Law. Subsequently they were handed over under the Supratnama of same date to appellant unit. Both the goods and tempo were provisionally got released under B-l 1 Bond for Rs. 1,17,533.50 and Rs. 3,00,000 backed by cash security of Rs. 29,300 and Rs. 30,000 respectively, by the appellant factory. From the above, it is revealed that appellant factory had despatched Excisable goods on 22.7.91 under GPI No. 154/20.7.91, which showed that there was double transaction on 20.7.91 and 22.7.91 under the above GPI, and had cleared Excisable goods (6 cartons) with GPI, subsequently produced on 23.7.91 and Excisable goods were removed in Tempo seized, which was found to be engaged in carrying of Contraband offending goods. Show cause notice was issued to appellant factory on 20.1.92 for contravention of Rule 52A, read with Rule 173G(4) of Central Excise Rules, calling upon to show cause, why the goods seized as described above, should not be confiscated under Rule 173Q(1) of Central Excise Rules, penalty should not be imposed on them under Rule 173Q(d) of the Central Excise Rules 1944, and why seized Tempo No. GJ-6-TJ123 belonging to Ashok Kumar Motilal Shah of Vadodara should not be confiscated under Rule 173Q of Central Excise Rules. Appellant replied it on 17.6.92. Personal hearing was held on 21.12.93. Sri. K.R. Korde, Central Excise Consultant, appeared for appellant filed his written submission and also argued the case. The Order-in-Original was passed after going through all the available material on record, on 31.1.94 by Assistant Collector of Central Excise, Div. II, Baroda, confirming the show cause notice, and confiscated the goods valued Rs. 1,17,533.50 under Rule 173Q with redemption fine of Rs. one lakh, and imposed penalty of Rs. 3 lakhs under Rule 173Q on the appellant, and confiscated the Tempo No. GJ-6-T-1523 under Rule 173Q with redemption fine of Rs. one lakh to be paid by owner Ashok Kumar Motilal Shah under Section 115(2) of the Customs Act read with Section 34 of Central Excise Act. The appeal preferred against the above order was dismissed under the impugned order, after hearing the appellant and perusing all the material available. Hence this appeal.
2. Perused the Show cause, Reply and GP's, Panchanamas, Statements under Section 14 of Central Excise Act, Documents produced, Orders of Lower Authorities, Appeal memorandum Synopsis. Heard Sri D.H. Shah, learned Counsel for appellant and Sri A. Chopra, learned JDR for Respondent. Their contention are taken note of, and discussed below in the light of documents available on record. The competence of Assistant Commissioner and Jurisdiction to adjudicate is not pressed in the appeal. The above paras disclose the department's case. The defence of appellant in response to it, as per reply to show cause notice, written submissions, appeal memorandum and synopsis and arguments, is that "they manufacture mainly of deep drawn pressed Motor Vehicle parts for supply to original equipment manufacturers, and parts are fabricated as per the customer's requirement and are supplied to them as per their despatch schedule. Customers are from Zahirabad, Andhra Pradesh, Bombay, Igatpuri & Nasik (Maharashtra), Pithampur, Indore (M.R), Calcutta (West Bengal) & Madras. The seized goods were urgently required by M/s. Mahindra Nissan Allwyn Ltd., Zahirabad (A.R), as per their RO. No. 594/0 dt. 1.4.91, showing rates, terms & conditions etc. of purchase, Delivery schedule: May/June 1991, July/August 91, Telegram dated 11.6.91 for despatch of materials as critical position has arisen, and deletion of one item of material from Import List, Telegram dated 11.7.91 for urgent despatch as committed to Mr. Ravindra Kumar during his visit to BMW. Allegation of double despatch in Page 3, Para 12(1) of show cause notice is on hypothetical basis without any independent evidence. In Automobile Industry, the automobiles come into final existence when all the required parts/accessories are assembled in line assembly. Line assembly will come to a halt at the stage where the part required at that stage is not available. Suspicion is no proof. Due to rainy reason (sic) [season], Jyoti Transport Co. (commission agent for arranging transport with truck owners) could not arrange for vehicle, although promised. It is difficult to get a transport vehicle with national permit for transporting through states to Zahirabad, where there is little hope to get another consignment for Transport to other places in his emplty (sic) [empty] vehicles for truck owner. Dealing assistant cancelled the Gate Pass when it could not be transported on 20.7.91 and issued fresh one after receipt of Transport vehicle in the factory itself. Issue of hypothetical double transportation could not have arisen. If he had acquired knowledge and acted wisely, factory would not have required to pass through such an unwarranted ordeal. Evidence has to be interpreted in true spirit and drop allegation of double transportation. While giving seized goods, under supratnama, in the presence of Superintendent and I/C Inspector, original Gate Passes were withdrawn, and advised to issue fresh gate pass. Accordingly, material were despatched after execution for transport of the said goods showing thereon payment particulars as per old GPI is withdrawn. B 11 bond backed by cash security is as under old GPI No. 154 dt. 20.7.91 & 159 dt. 22.7.91 with new GPI No. 181 dt. 9.8.91 & 182 dated 9.8.91, which reveals basic duty and special duty was paid under original GPI 154 & 159. But further special duty was paid at 5%, since it was raised from 5% to 10% with effect from 25.7.91. Allegation of double transaction is not sustainable. Appellant factory is near Atladra Jakat Naka. To enter Baroda Municipal Corporation and deliver it to Octroi Naka (Harni) transit gate pass has to obtained, and to support that goods have left the BMC limit. In addition, a declaration in Form 45C under State Sales tax rules was given to the check-post while leaving Gujarat State limit.
3. Regarding clearance of samples without Gate Pass, they were transported under GPI No. 182 dated 9.8.91. Mistake on the part of dealing assistant may not be interpreted to such an extent of clandestine removal. Allegation is not sustainable. Contraband offending goods were covered by relevant documents. There is no positive evidence to support the allegation. Due to less knowledge of Excise Rules and Regulations of dealing assistant, factory has to face an ordeal, without remote intention of evasion of duty, on the part of appellant. Proposal of imposition of penalty and confiscation of goods is not sustainable, as clandestine removal is based on hypothetical basis. Token penalty would serve the purpose of Justice, as per Tribunal decisions , A Subramaniam u. Collector. If show cause notice is not dropped cross-examination of Inspector Mr. Takalkar and Mr. Bhalla regarding the document seen by them on 22.7.91 and permit to go through relevant diary for the purpose, is sought in personal hearing. Mr. Ramesh M. Jani, Supervisor will be produced for evidence. Six sample pieces of Auto parts valued at Rs. 1296.12 was transported without GPI, duty involved is only Rs. 272.00, which was given later on, and fresh GPI was prepared and sent with goods. There is no allegation in show cause notice that appellant has removed excisable goods twice under one and same GPI. Adjudicating authority has traversed beyond show cause notice. Seized goods are duty paid. Confiscation will not sustain. Evasion of Rs. 272 duty on 6 samples is unbelievable. If the removal had taken place on 20.7.91, same goods and same document could not have been found on 22.7.91. Imposition of Rs. 3 lakhs penalty under Rule 173Q, 3 times the value of goods, is illegal, as admittedly seized goods are duty paid, and 6 samples were worth Rs. 1296.12. According to JDR, as per Page 4 of Impugned order, GPI152 is used thrice. 16 items were not accompanied by any gate pass. According to the learned Counsel for appellant, no duty is demanded for 3 times user of GPI.
4. Simple fact is though gate pass was prepared goods could not be despatched on 20.7.91, which could be done on 22.7.91 only and goods were despatched on that day only. It was an error of Excise clerk as not cancelling GPI and to issue new one. Allegation of double transport is false. Within 2 days truck cannot go to Andhra Pradesh and come back to Baroda. Goods were solely and principally made for M/s. Mahindra Nissan Allwyn Ltd., Zaharabad, as per their specification and were not marketable any where also. Double transport to Andhra Pradesh within 2 days was impossible. No evidence is produced for double transport. Technical or procedural error does not prove it. Goods should not be confiscated, when there is no evasion of duty, and there is a clear proof that duty has been paid as per board circular. At the time of seizure goods were covered by GPI 159 dated 22.7.91 and 154 dated 20.7.91. Seizure was illegal. There was no clandestine removal. On 22.7.91 when tempo arrived GPI 159 dated 22.7.91 was prepared and six samples were placed in the tempo alongwith the goods of GPI 154 dated 20.7.91. They cannot be seized as duty paid. Seizure of Tempo was not sustainable as goods therein was duty paid.
5. Under Order-in-Original on page 2, it is observed the double transaction under GPL154 on 20.7.91. In page 6 in findings under serial No. 5B it is held Appellant has removed the goods thrice. No direct or circumstantial evidence is discussed. There is no interrogation of workers, staff members, security guard, transporters, octroi check post staff and consignees. Documents like challan, chits, correspondence, octroi transport passes are not brought on record. Goods allegedly removed has not been traced. Inspite of investigation for nearly 6 months, nothing is found against the appellant to show the intent to evade duty. Unauthorised removals should be conclusively proved by convincing evidence. Charges are serious. There is no evidence to invoke Rule 9 or to demand duty on two/three transactions held to have been made by appellant. As per Board's letter dated 21.9.78 No. 207/37-M/77.CK.6 if violations is technical and mistake by assessee on the facts of it is not mala fide, and there is no evidence of any intention to evade payment of duty, seizure is not called for. Duty paid nature and character of seized goods is an accepted fact. Even after recording defense in third para in Page 5, Additional Commissioner has confiscated goods and imposed heavy fine and exorbitant penalty for a minor mistake of appellant. Error of Excise assistant in not cancelling GPI 154 dated 20.7.91 or not endorsing fresh date and time of removal on 22.7.91 was not of grave consequence as Rule 173H(2)(d) take care of such situation, and require only an intimation to the proper officer, within the stipulated time. GPI was ready and duty debited on 20.7.91. On Monday 22.7.91 goods were cleared. In the normal course intimation would have been given, but for detention of goods to Superintendent on 22.7.91 under Rule 173H about retention of duty paid goods in the factory from 6.00 p.m. on 20.7.91 to 3.00 p.m. on 22.7.91. For 6 pieces of samples GPI 159 was prepared and duty was debited on 22.7.91. But Supervisor failed to hand over to Omprakash Udaybhani Singh with other papers, who accompanied in Tempo. Validity of GPI not challenged The only slip was it did not accompany goods (samples). Failure to suitably endorse GP 154 dated 20.7.91, on 22.7.91 at the time of removal of goods from appellant's factory and time and date of removal to be corrected is not a violation of any rule. That mistake is admitted. It is not with an intent to evade duty. There is no duty involved on the seizec goods.
6. As contended by appellant, show cause notice does not demand any duty, anci there is no dispute in that regard. It does not also state anything of clandestine removal. The only irregularity is the six samples carton was not having gate pass, which was subsequently produced on 23.7.91. It is valued Rs. 1296.12, and duty liability was Rs. 272.00. The remaining goods 16 wooden boxes were on confirmity with those shown in GPI No. 152 dated 20.7.91. It is also duty paid. There are no sufficient material before the Lower Authorities to hold that the seized goods were offending goods. Even if the statements, under Section 14 of Excise Act and documents such as Panchanamas, Delivery challans, Chit and Gate Passes are examined in detail it does not support the allegation of double transaction under the GPI No. 154. As pointed out by appellant, there is no independent supporting material. There is no investigation in that line. The mistakes in documents are admitted and explained by appellant in reply to show cause notice written submission. The Order-in-Original deals only with suspicion; which cannot take the place of proof. No positive evidence is shown for double transaction with substantial material. Goods transported under same invoice is not traced. So also its destination. The orders of lower authorities is mainly based on the errors and omission of the staff of appellant factory, which are admitted and satisfactorily explained. There is no evasion of duty by appellant as per reply to show cause notice and written submission. It is improbable to believe that appellant had intention to evade duty of Rs. 272.00 on 6 cartons samples, valued Rs. 1296.12 Ps. The failure to send gate pass alongwith goods is an accidental one. The omission to endorse GPI, mistakes in chit, are not sufficient to conclude serious charges as mentioned on the show cause notice. As urged by appellant, show cause notice allege double transaction. But finding of Additional Commissioner in Para 5B of his order is, there was an attempt by the party to dump the goods for third time, which is an unacceptable conclusion. The entire consideration by lower authorities in their orders, in the facts and circumstances of the case is vague thinking that this must have happened. There is no definite and positive conclusion. The probability is not established.
7. Now coming to the documents available on record and its consideration and conclusion about the allegation in show cause notice, in the light of reply and written submission of the appellant, what is the ultimate position requires consideration. Ext. A' GPI 154 describes items with Rs. 16,237.88 and duty of Rs. 23,247.00 and special duty of Rs. 1,162.00 is debited in PLA under GPI 152 dated 20.7.91. Ext. 'B' GPI 159 shows 2 items of 3 cartons each with assessable value of Rs. 1296.12, for which duty of Rs. 272.00 is debited in PLA 157 on 22.7.91. Detention order shows both the above 2 items and Tempo No. GJ-6-T-5123 Swaraj Mazda. The statement under Section 14 of the Central Excise Act of the staff of appellant corroborates the above documents, and written submission and reply to show cause notice gives complete picture on the factual aspect of errors and omissions with plausible reasons. The Order-in-Original under the leading finding at item No. 1 to 4 has observed the rising on suspicion in the GPI dates and omission of Truck No., and overwriting of hours of despatch in GPI159 dt. 22.7.91 and the striking of vehicle No. GRV 7442 in the factory chit, and clearance of goods through Jyoti Transport Company between 20.7.91 and 22.7.91 for 2nd time as unrefuted. The reply and written submissions have clearly explained these things. Department has to make out a specific case in that regard first; which is not even attempted. Its effort is only of faultfinding. Under item 5 to 7 in page 6 of the order, statement of Tempo Driver and GPI 159 is considered showing the discripancy of time of despatch of goods, which is explained in the written submission of appellant before the Commissioner (Appeals). There is no reply by department in that regard. In the absence of it, appellant's stand gains weight. Under item No. 8 in page 7 deals with the Sales tax 45A, showing the clearance of goods mentioned in Delivery Challan No. 485 to 489 under GPI 154 dated 20.7.91 and factory chit by Jyoti Transport on 20.7.91. No Tempo number is shown. Even this is explained by appellant in reply to show cause notice and written submission satisfactorily. There is no positive evidence in that regard, contrary to reply to show cause notice. In the absence of it, appellant's case remains uncontroverted. As already observed discrepancies, omissions, errors are magnified, there is no independent investigation by the department with corroborative oral and documentary evidence, in support of the allegation, negativing the defense set up. Department has to make out a probable case as per show cause notice by independent evidence. The appellant should rebut it. But in the case on hand, the department expects the appellant to refute show cause allegations, which is stand refuted in the reply to show cause notice and written submissions. There is a fair admission of omission and errors, which is not properly weighed. The penalty imposed is disproportionate, looking to show cause notice and reply. There was no scope for confiscation, when duty element is not in dispute. In the Impugned order in Para 6, Commissioner (Appeals) as also relied on sales tax form to hold that 22 cases of Auto parts covered by Delivery Challans No. 485 to 489 were transported on 20.7.91 under GP No. 152 in the vehicle of Jyoti Transport Co. If that is so, they should have been seized from them. The fact that they were found on 22.7.91 in the Tempo, in transit check, negatives that conclusion. Subsequent production of GPI regarding 6 cartons is held to be an adjustment attempts as post-detection cover-up. The statements of staff of appellant factory explains this, which shows as an accidental omission. If there is no duty payment documents and attempt of clandestine removal, there is no reason as to why duty is not demanded and confirmed. This reasoning cannot be upheld. From the explanation of appellant in reply to show cause notice, written submission, and appeal memorandum and synopsis and oral arguments, it is apparent that error, omission, discrepancy, though satisfactorily explained, is ignored and without any basis, confiscation is ordered. It cannot stand. Penalty sustains, but requires to be reduced, looking to the gravity of the above omission, error and the facts of the case.
ORDER For the reasons discussed above, appeal is allowed in part with consequental relief as per law, against the appellant. Impugned order is set aside regarding the confiscation of goods seized from Tempo. Penalty imposed on the appellant is reduced to Rs. 50,000 (Rupees Fifty Thousand) only.