Customs, Excise and Gold Tribunal - Delhi
Sayeed Absar Biri Works vs Commr. Of Central Excise, Ahmedabad on 14 February, 2002
Equivalent citations: 2002(81)ECC626, 2002(143)ELT406(TRI-DEL)
JUDGMENT P.S. Bajaj, Member (J)
1. The above captioned appeals have been filed by the appellants against the common order-in-original, dated 31-8-2001/10-9-2001 vide which the duty and the penalties have been confirmed against them of various amounts as detailed thereon.
2. The appellant Number 1 is a partnership firm (hereinafter referred to as 'FIRM') engaged in the manufacture of hand made biris having brand names as Syed Absar, Tulsi Kishan and Pathan. The firm has got two factories; one at Ghoorpur and the other at Phoolpur both in Allahabad. For both these factories; separate central excise registrations had been obtained. The other appellants, namely, Shri Mohd. Akhtar, Shri Aflaq Ahmed, Shri Akhlaq Ahmed, Sh. Hasnain Ahmed and Shri Sahabuddin Khan, were partners in the firm. The factories remained under the physical control of the Excise Department till 13-10-1993. On receipt of secret reliable information that the appellants were indulging in evasion of excise duty by suppression of production of their branded hand made biris and by clandestine removal thereof without payment of duty, simultaneous search was made on 24-3-1994 in the premises of their both factories and godowns. From the factory premises at Ghoorpur, certain private records, such as, weekly report books and ledgers were recovered and seized and statement of Md. Akhtar, Manager, was also recorded. Certain bags containing biri tobacco unaccounted in the statutory records were also seized. Similarly; from the factory premises at Phoolpur, record was taken into possession. On scrutiny of record of both the factory premises, the clandestine manufacture and the removal of the goods was detected. Accordingly, two show cause notices were issued to the appellants, one for the Ghoorpur factory and another for the Phoolpur factory premises. On receipt of reply of those notices wherein the appellants denied the allegations of clandestine manufacture and removal of the goods without payment of duty, the Commissioner (adjudicating authority) through the impugned order confirmed the duty demands and imposed penalties of various amounts as detailed therein.
2.1 We have heard both sides and gone through the facts on record.
3. The learned Counsel has contended that the duty demand of Rs. 1,04,98,682/- has been confirmed on the Ghoorpur factory of the appellants only on the basis of the private records which are not admissible for lack of corroboration from any other source for proving the suppression of production and clandestine removal thereof by the appellants during the disputed period from 1-4-1989 to 24-3-1994. Therefore, the impugned order deserves to be set aside.
4. The learned SDR, on the other hand, has not been able to contest this contention of the Counsel.
5. The bare perusal of the record shows that the duty demand of the disputed amount has been formulated and confirmed simply on the basis of the weekly reports and ledgers which contained entries regarding the unaccounted kacchi biris. There is nothing on the record to suggest if any effort was made to collect evidence regarding the purchase of the raw material, consumption of the electricity for the manufacture of the branded biris and clandestine removal of the same, to various parties. No statement of any supplier of the raw material was recorded. No record pertaining to the electricity consumption during the disputed period by the appellants, was seized and no statement of any buyer through whom the goods were sold by the appellants without payment of duty, was recorded. From the weekly reports and the ledgers, it could not be concluded that the entries made therein related to the finished products. No seizure of any vehicle carrying the goods without document was ever intercepted and seized by the Revenue Department. The factory premises remained under the physical control of the Department till 13-10-1993 and as such the question of suppression of production and clandestine removal of the goods without payment of duty did not arise. No doubt, seizure of biris worth Rs. 1,41,750/- was made during the checking, but it was found that those biris were the same which were returned by the buyers due to quality problem, to the appellants and this fact was evident even from the T/R of the transporter and the letter of the buyer (Pages 155 and 156 of the paper book). It has not been disputed before us by the learned SDR that on the basis of the evidence referred to in the impugned order, no duty demand of the disputed amount on the Ghoorpur factory of the appellants could be legally confirmed.
6. The extended period of limitation for confirming this demand also could not be invoked as the factory remained under the physical control of the Excise Department till 13-10-1993 in view of the law laid down by the Tribunal in the case of ITC ltd. v. CCE, 1998 (100) E.L.T. 245 (T) and LML Ltd. v. CCE, 1991 (51) E.L.T. 434 (T). There was very heavy onus on the Department to prove the suppression of production and clandestine removal of the goods during the disputed period when it was under their physical control, but they have failed to discharge the same. Therefore, the duty demand confirmed on the Ghoorpur factory premises of the appellants by the Commissioner cannot be sustained.
7. On the Phoolpur factory of the appellants, the demand of Rs. 48,21,862/- has been confirmed. Out of this amount, demand of Rs. 4,26,438/- had been based on two challan books which were resumed by the officers at the time of checking from the factory premises as in those challan books Sl. Nos. 1 to 11 were found having only triplicate blank copies of the challans. The challan books were sent to Forensic Science Laboratory for expert opinion, who submitted its report on 11-7-1994. The removal of the goods on the basis of these challans was not disputed by Md. Akhta, General Manager of the firm, in his statement and he could not also produce any document to show that the goods through these challans were removed on payment of duty. The removal of the goods through these challans also stood corroborated from the carbon paper which was recovered from the factory premises and sent to the Forensic Science Laboratory on 20-2-1995 for report. The report of the said laboratory showed that the goods were sent twice against these challans. Therefore, the confirmation of the demand of Rs. 4,26,438/- on the basis of this evidence on the appellants' Phoolpur Factory is fully justified and as such the same is upheld.
8. Regarding the confirmation of the balance duty amount, it has been not disputed before us by the learned SDR that there is no cogent evidence on the record to prove the clandestine removal of the goods. Period of this demand is the same which is in the case of Ghoorpur factory and during that period till 13-11-1993, the factory remained under the physical control of the Department. There is no evidence also on the record to prove the receipt of excess raw material, production of the goods and removal of these goods in a clandestine manner by the appellants. No statement of any buyer was recorded to whom the appellants allegedly sold the goods without payment of duty. In the absence of any cogent and convincing positive evidence, the duty demand could not be confirmed on the appellants of the balance amount. In this context, the reference may be made to the cases (i) M/s. Icy-cold Con. Ent., 1994 (69) E.L.T. 337 (T); (ii) M/s. Khanna Rubbers, 1996 (82) E.L.T. 251 (T); and (iii) M/s. Ganga Phosphorus & Chem., 1995 (77) E.L.T. 589 (T), wherein it has been observed that the duty demand in the absence of corroborative/positive evidence would not be sustainable under the law. Therefore, the duty demand of the balance amount of Rs. 43,95,424/- could not be legally confirmed on the appellants and the same is ordered to be set aside.
9. Regarding imposition of penalties on the appellants, the learned counsel has, however, prayed for leniency on the ground that they are facing financial hardship. He has also pointed out that Shri Badruddin Khan, appellant, had expired while Sh. Hasnain Ahmed is no longer in the service of the firm and is without any means to support himself. Therefore, keeping in view the facts and circumstances of the case and the duty amount evaded by the firm, the penalty on the firm i.e. appellants No. 1, is reduced to Rs. 1 lakh (Rupees one lakh only), while on the other two appellants, namely, Shri Akhlaq Ahmed and Shri Sahabuddin Khan is reduced to Rs. 50,000/- (Rupees fifty thousands only). The penalty on the appellant, Shri Hasnain Ahmed is set aside, while on Shri Badruddin Khan, on account of his death, the penalty stands abated.
10. In view of the discussion made above, the impugned order of the Commissioner regarding confirmation of duty and imposition of penalty in respect of Ghoorpur factory premises of the appellants is set aside, while regarding Phoolpur factory of the appellants, the impugned order is modified by confirming the duty of Rs. 4,26,438/- only and imposing penalties of the amounts on the appellants, referred to above.
11. All the appeals of the appellants accordingly stand disposed of in the above terms.