Customs, Excise and Gold Tribunal - Bangalore
Resha Wires Pvt. Ltd. vs Commissioner Of Central Excise on 1 December, 2005
Equivalent citations: 2004(177)ELT398(TRI-BANG)
ORDER T.K. Jayaraman, Member (T)
1. This is an appeal against Order-in-Original No. 15/2000, dated 29-11-2000 passed by the Commissioner of Central Excise, Bangalore-I Commissionerate. The brief facts of the case are as follows:
2. The appellants M/s. Resha Wires Pvt Ltd., Bangalore (RWPL) manufacture Super Enameled Copper Wire (SECW) and bare copper wire (BCW), both excisable commodities. The departmental officers visited the factory premises on 6-6-96 and found excess stock of enameled copper wire. The excess stock amounting to 733 Kgs was seized. The search of the premises revealed several incriminating records. It appeared that the appellants suppressed the production of goods and duty short paid during the period from January, 1994 to June, 1996 amounted to Rs. 16,32,806/- in respect of bare copper wire. Penal proceedings were initiated against the appellants. Consequent to the proceedings, the adjudicating authority confirmed a total demand of Rs. 62,89,701/-, He confirmed a duty of Rs. 9,54,00/- in respect of super enameled copper being the differential duty arrived at by adopting the value of the goods cleared in the Depot during the year 1994-95 as detailed in Annexure 10 to the show cause notice. He imposed a penalty of Rs. 15,00,000/- under Rule 173Q of Central Excise Rules, 1944 on the appellant. The land building plant and machinery belonging to the Company were confiscated tinder Rule 173Q. But an option to redeem the same on payment of a fine of Rs. 5,00,000/- was given. A penalty of Rs. 1,00,000/- was imposed on Shri Iqbal Ahmed the Managing Director of the Appellant Company. The appellants strongly challenge the findings of the adjudicating authority. Hence, they have come before this Tribunal for relief.
3. Shri Ramesh Ananthan learned advocate appeared for the appellants and Shri Ganesh Havanur learned SDR for the revenue.
4. The learned advocate pointed that the Revenue has simply gone by the packing slips to arrive at the so called clandestine production and removal. He said there is no corroborative evidence like excess purchase of raw material, consumption of electricity and evidence of supply of unaccounted materials to various buyers. He pointed out to the cross-examination of Shri M.S. Manjunath Superintendent of Central Excise on 7-9-2000 highlighting the following proceedings.
Q. Have you tried to evaluate the production applying any input output norms taking into account the production capacity of the plant?
A. I recall that some such estimation was done, but I am not in a position to give full particulars without verification of the records.
Q. It has been alleged that the noticees's factory produced the subject goods in excess of the quantity intimated in the RG 1. If so, was any verification made to find out to whom these goods were sold or how these goods were disposed off?
A. I am not very sure whether such a verification was done. I have to refer to the case records before any reply can be given to this question.
Subsequently on 29-9-2000, further cross examination was held and the Investigating Officer contended as follows:
a. "the method adopted by us to quantify the goods which have escaped payment of duty was to take the quantity as shown in the packing slips and compare the figures recorded in the RG I Register." b. "I may also add that because of non-availability of input/output norm, we did not estimate or evaluate the production taking into account the production capacity of the Unit." c. "Since, the entire estimation of the quantity produced was based on packing slips or wherever production figures were shown in the RG I itself, we did not attempt to estimate the likely production on the basis of any raw material consumed." d. "We have not made any verification with any buyer to whom these goods could have been sold." It is clearly seen from the above that no investigation has been done to prove the clandestine manufacture or removal. As such, amongst other case law the following decisions are very much relevant.
1. Collector v. Technoweld Industries
2. Suvarna Polymers Pvt. Ltd. v. CCE
3. Sanket Food Products Pvt. Ltd. v. Commr.
4. Bearing Manufacturing Company v. Commr. 2000 (123) E.L.T. 1148
5. Sayeed Absar Biri Works v. Commr.
5. As regards the differential duty on account of adopting the value of goods cleared in the Depot, the learned advocate said there is absolutely no evidence to show that the appellants had cleared the goods at a higher price from the depots.
6. The learned DR reiterated the OIO. He said that the appellants had their own generator and could have easily produced more goods than what is accounted for in the statutory records. He said the department has taken into account, the double reckoning of production on account of packing slips and reduced the demands. Therefore, he requested the Bench to confirm the demand in the OIO.
7. We have gone through the records of the case carefully. In this case, there is no thorough investigation, at all. In a number of rulings of the Tribunal, it has been held that for confirming clandestine production and removal, private records require corroboration. Consumption of electricity, purchase of excess raw material, evidence of purchase of unaccounted goods by buyers etc., normally establish clandestine production and removal. In this case, the entire charge rests on the packing slips recovered from the appellants. The appellants undertake job work also. Therefore, the packing slips cannot be a conclusive evidence for the production of goods on behalf of the appellants. No attempt, has been made with regard to the consumption of electricity. Paras 23 and 24 of the Order-in-Original are reproduced.
The arguments advanced by the Noticee Company that, no investigation has been made to cross-verify with the buyers of the goods, or the production based on the amount of electricity consumed, again are not acceptable. It is found that the factory had, according to its own records maintained in the course of their normal business, packed certain quantities of the products. Since these quantities were not taken on record, obviously, the company would have and in actual fact had taken precautions not to keep any documents evidencing their sale to several consumers in their factory. Since the department could not lay its hands on any one of these documents, the question of their making any enquiries with the buyers of the products, did not arise since obviously enough the assessee had taken steps to put away all the evidence since it was in their possession.
As regards the estimation of production on account of electricity consumed, it is to be noted that the company had a generator of its own and the quantum of electricity consumed by them from the public electricity authority could not have alone enabled an estimation of the quantity produced. As for the electricity generated by using the generator, the company would have and in actual fact, had taken steps not to retain any evidence, which would have indicated the quantity of fuel consumed. Thus, the argument that there was no excess production because the electricity consumed was less, again holds no water. Similarly, since the assessee had taken clear steps to keep the excess production totally out of the accounting procedure, the question of estimation of production on the basis of raw material consumed, as reflected in the records would not provide any clue as to the total production.
A reading of the above paras indicate that the OIO has been issued on the basis of the presumptions and assumptions. In order to bring to book duty evaders, Revenue should do thorough investigations. If duty evaders do not leave any trace of their offences, we cannot presume commission of offence and penalise them. Detection of economic offence is verily a battle of wits between Revenue and trade. Adjudicating authority cannot come to the rescue of Department Officers who abdicate their responsibility. It appears as though the adjudicating authority justifies the poor investigation by the Departmental Officers. Even in respect of the confirmation of differential duty of Rs. 9,54,108/- on super enameled copper wires, there is no discussion in the findings. A perusal of the record of cross-examination, reveals the unsatisfactory quality of investigation. In these circumstances, we find that the OIO has no merits. We set aside the same and allow the appeals.
(Pronounced in open Court on 1-12-2005)