Customs, Excise and Gold Tribunal - Mumbai
Vanita Snuff Works vs Collector Of Central Excise on 31 October, 1994
Equivalent citations: 1995(77)ELT178(TRI-MUMBAI)
ORDER P.K. Desai, Member (J)
1. This appeal is directed against the Order-in-Original No. 38/CEX/87, dated 27-4-1987 of the Collector of Customs & Central Excise, Pune, confirming demand of Rs. 12,943.33 vide Rule 9(2) of the Central Excise Rules, 1944, read with Section 11A of CESA, 1944, and also imposing personal penalty of Rs. 10,000/- under Rules 210 and 226 of the Rules.
2. On visit to the appellants' premises on 3-2-1986, and scrutiny of the records and excise documents, it was revealed that the appellants had manufactured 2018.430 kgs of snuff in 1980-81 and 138.800 kgs during 1981-82 and had cleared the same without payment of duty. The duty evasion was worked out at Rs. 12,943.33. On revisit on 4-2-1986, they found that the accounts were not maintained for a long time, and hence seized 741 kgs of snuff which was under process. In the statement of the partner recorded thereafter, he admitted both the lapses. Show Cause Notice dt. 1-8-1986 was therefore served, and in reply dt. 28-8-1986, the appellants denied the charges and pleaded that the factory was within the physical control of the department and that the stock taking was being done from year to year and accounts were found to have been properly maintained. They also pleaded that the demand was not properly worked out and also that the same was time barred. The matter was adjudicated and the impugned order was passed, where 741 kgs of snuff under manufacture was ordered release.
3. Shri K.P. Joshi, the Ld. Advocate for the appellants submits that before issue of the subject Show Cause Notice on 1-8-1986, a Show Cause Notice dt. 31-3-1986 was issued where only contravention alleged was in relation to non-maintaining of proper account, and for confiscation of 741 kgs of snuff under process, and the provisions invoked were Rules 226 and 210 of the Rules, and the same however, came to be dropped, vide communication dt. 15-4-1986. In his submission, the subsequent Show Cause Notice is therefore, not valid. He also pleads that the penalty that can be imposed under Rule 210 is Rs. 1,000/- and the one under Rule 226 is Rs. 2,000/- whereas the penalty imposed is Rs. 10,000/- which is beyond the statutory empowerment of the adjudicating authority. As regards the clandestine removal, he submits that the factory was at all times under physical control of the department and the stock and account books were being inspected every year, and there could be no scope for any undetected clandestine removal. The Ld. Advocate further pleads that, even otherwise, with Show Cause Notice issued on 1-8-1987 the alleged demand for alleged removal during 1980-81 would be beyond five years, and the claim for duty from 1-8-1981 to 31-3-1982 which is within the period of five years, is beyond the normal period of six months, and with Department exercising physical control over the factory, the extended period criteria could not stand applicable. The Ld. advocate refers to the decision of the Tribunal in LML Ltd. v. Collector - 1991 (51) E.L.T. 434 (Tribunal).
4. Shri Krishnamurthy, the Ld. JDR, has however supported the order and has submitted that the appellant has admitted the fact of removal without payment of duty and has accepted the mistake. He also pleads that the appellant has also not maintained proper accounts. He has referred to the decision of the Tribunal in Roxy Enterprises) Ltd. v. Collector, 1991 (53) E.L.T. 585 (Tri.).
5. Considering the submissions made and going through the records, the demand raised pertains to the period 1980-81 and 1981-82 and the Show Cause Notice issued is dt. 1-8-1986. Section 11A of the CESA, 1944, provides the period of limitation as six months from the date of alleged clandestine removal, and the evasion of duty, and extends it to 5 years, if there is an act of suppression or fraud etc. There is no provision to raise a demand for duty evasion if it has happened beyond a period of five years before the date of raising the demand. The period beyond 1-8-1981, therefore, would go beyond the said period of five years, and the demand raised for alleged duty evasion beyond that period therefore, would squarely fall beyond the statutory powers to raise any demand. The order of the authority below, to that extent has therefore, to be held as not sustainable.
6. The demand for the period 1-8-1981 to 31-3-1982, though is beyond the normal period of six months, is within the extended period of five years. However, to prove the availability of extended period, the department has to prove, the act of suppression or fraud or non-compliance with the statutory provisions. There does not appear to be any specific averment, as to how the fraud or suppression is made. There is no denial to the plea that during the relevant period the factory was under physical control, and as per the decision of the Tribunal in Re : LML Ltd. (supra) under such circumstances, extended period may not be applied. Even if the ratio of that order is applied with caution as there may be some ways to evade duty, as the officer does not remain present throughout the day, then some cogent evidence for suppression or fraud has to be ascertained. The alleged admission of non-payment of duty may be a circumstance, but the same cannot be taken as a conclusive proof to invoke extended period. The decision referred to by the Ld. J.D.R., also refers to certain other evidence brought on record. No such evidence is available, and no explanation is given how, the matter could not be detected during yearly checking of the excise registers. The extended period therefore, has to be held as not available.
7. In the result the entire demand has to be held as barred by limitation.
8. With this being the position, the validity of the demand on other counts heed not be gone into.
9. As regards the penalty, so far as penalty for non-maintenance of accounts is concerned, show cause notice dt. 31-3-1986 was already issued which was dropped on 15-4-1986. No fresh notice could therefore, be issued on that ground and hence penalty imposed on that count cannot be sustained.
10. Even otherwise, the penalty imposed in excess of the maximum prescribed under the statute, is illegal, and shows non-application of mind and cannot be sustained.
11. In the result, the order, both in relation to demand of duty and imposition of personal penalty is not sustainable and is therefore, set aside.
12. The appeal is therefore, allowed with consequential relief.