Custom, Excise & Service Tax Tribunal
M/S Umesha Textiles Pvt. Ltd vs Commissioner Of Central Excise, Mumbai on 12 September, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. E/2400/99 (Arising out of Order-in-Appeal No. 08 of 1999 dated 17.3.1999 passed by the Commissioner of Central Excise (Adj.), Mumbai). For approval and signature: Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Umesha Textiles Pvt. Ltd. Appellant Vs. Commissioner of Central Excise, Mumbai Respondent Appearance: None for Appellant Dr. B.S. Meena, Addl. Commissioner (AR) for Respondent CORAM: SHRI P.R. CHANDRASEKHARAN, MEMBER (TECHNICAL) SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 12.09.2013 Date of Decision: 12.09.2013 ORDER NO. Per: P.R. Chandrasekharan
The appeal is directed against Order-in-Original No.8 of 1999 passed by the Commissioner of Central Excise (Adjudication) Mumbai.
2. This appeal was earlier dismissed by this Tribunal vide order dated 27-9-2004 for non-prosecution. Subsequently, the appeal was restored vide order dated 2-7-2010. Since then, the appeal has been listed for hearing for about 15 times and most of the times the appellant sought adjournment for one reason or the other. The case came up for hearing on 5-9-2013 when once again the counsel for the appellant sought adjournment and the request was granted as a last chance and the case was listed for hearing to-day. None represented the appellant. Since the matter is very old and several opportunities were granted which have not been made use of by the appellant, we take up the appeal for consideration and disposal.
3. The appellant M/s Umesha Textiles Pvt. Ltd. is a texturiser of polyester yarn (PTY) from non-texturised yarn(POY). Intelligence received by the Anti-evasion Directorate revealed evasion of excise duty by the appellant by resorting to suppression of production and clandestine clearance of textured yarn. Therefore, a search was conducted at the factory and office premises of the appellant on 26-7-2004. The search revealed that the appellant had not accounted for 39107 kgs of PTY manufactured out of 39107 kgs. of POY received from M/s Hind Silk Mills Pvt. Ltd. in their books. Further a quantity of 13931.086 Kgs. of PTY manufactured out of POY supplied by M/s Reliance Industries Ltd. were also not accounted for. Stock taking conducted at the time of search revealed a shortage of 17190.98 Kgs. of POY procured under DEEC scheme. The appellant admitted manufacture and clearance of PTY totally amounting to 70229.066 kgs. as mentioned above without accounting for in their books of accounts and without payment of central excise duty. Enquiries made with the suppliers also confirmed the above position. On completion of investigation, a show cause notice dated 10-11-95 was issued to the appellant alleging suppression of production and clandestine removal of PTY for a quantity of 70229.066 kgs. valued at Rs.73,74,051.90 (@ a tariff value of Rs.105 per kg.) and demanding central excise duty of Rs.50,88,095.80/- under the provisions of section 11A of the Central Excise Act, 1944 and proposing to impose penalties under Rules 209A, 226, 173Q, 52-A(8) and 9(2) of the Central Excise Rules, 1944 and also proposing to attach/confiscate land, building, plant and machinery belonging to the appellant under the provisions of Rule 173Q(2) of the said Rules. The said notice was adjudicated by the impugned order and the duty demands were confirmed and an amount of Rs.28,33,303/-paid by the appellant during the stage of investigation was appropriated. A penalty of Rs. 40 lakhs was imposed on the appellant under Rule 173Q(1) and the land, building, plant and machinery of the appellant was confiscated with an option to redeem the same on a payment of Rs. 5 lakhs. Penalties of Rs.2 lakhs each was imposed on the Directors of the appellant firm under Rule 209A of the said Rules. Aggrieved of the same, the appellant is before us.
4. In their appeal memorandum, it has been urged that the finding of the adjudicating authority that the appellant failed to substantiate their plea regarding non-availability of physical stock of 59,915.460 kgs. of POY shown in their Form IV register is improper and baseless. It is submitted that the stock declaration of the said quantity of POY was on account of outstanding DEEC obligation as on 1-3-94 and the POY locally purchased during 1-3-94 to 26-7-94 from M/s Hind Silk Mills Pvt. Ltd. and M/s Reliance Industries Ltd. and the reconciliation statement submitted by them would prove that the entire quantity of 39107 kgs. of POY procured from Hind Silk Mills and 14352 kgs. of POY procured from M/s Reliance was utilized for texturising and subsequently cleared on payment of duty. None of the statements recorded either of the Director or of employees prove that texturised yarn made out of above receipts was removed clandestinely. The Directors of the appellants firm could not explain the alleged difference because they were under tremendous pressure and accordingly they made the payment of Rs.28,33,303/- under co-ercion. Had there been any intention to evade duty, there was no need to book the same in the factorys purchase figures and factorys receipt record. It is also contended that the shortage of 17190.98 kgs. allegedly found short physically on 26-7-94 is also incorrect as 10313.526 kgs. were lying as work-in-process which was not taken into account. Accordingly, it is pleaded that the impugned order is not sustainable in law and merits to be set aside.
5. The ld. Addl. Commissioner (AR) appearing for the Revenue on the other hand re-iterates the findings of the adjudicating authority. He submits that the sale of 39107 kgs. of POY by Hind Silk Mills to the appellant is evidenced by the receipts in the material inwards register. M/s Hind Silk Mills have also confirmed the sale of the said quantity of POY to the appellant. However, they did not account for these purchases in their books of accounts and the Director of the appellant firm has admitted to this. Similarly the sale of 14353 kgs of POY has been confirmed by M/s Reliance Industries Ltd. which again has not been entered in the Form IV Register of the appellant. Similarly a quantity of 17190 kgs of were found short at the time of stock taking which was done in the presence of the appellants directors. The subsequent explanation that they were lying as work-in-progress is only an after thought. Accordingly he submits that the impugned order is sustainable in law and merits to be upheld.
6. We have carefully considered the grounds urged in the appeal memorandum and the submissions made on behalf of Revenue.
6.1 As regards the 39107 kgs. of POY procured from Hind Silk Mills Pvt. Ltd., the receipt of the same is recorded in the factorys inward register but not accounted for in the Form IV register. Receipt of the material has been admitted by Shri. Jagdish Prasad Tak, the factory in charge and authorized signatory of the appellant firm in his statement datd 26-7-2004. Sale of the said material to the appellant has been confirmed by M/s Hind Silk Mills also in their letter dated 14-9-94. The appellant in their letter dated 30-7-94 addressed to the investigating agency has confirmed that they had not entered the receipt of the said goods in their Form IV register and that they were voluntarily depositing the duty amount of Rs.28,33,303/- towards the textured yarn manufactured and cleared without payment of duty out of the POY received form Hind Silk Mills. Shri. Arun Bhartia, Director of the appellant firm in his statement dated 25-10-94 has confirmed the above facts. Thus the receipt of the said material and consumption of the same in the manufacture of PTY and clearance without payment of duty is clearly established and supported by the relevant records and statements. Therefore, the appellants contentions to the contrary is liable to be rejected.
6.2 A regard the second allegation pertaining to 13,931.086 kgs. of POY received from M/s Reliance Industries, the said procurement has been confirmed by the supplier vide letter dated 6-9-94. However, the receipt of the said material has not been accounted for in the Form IV register or in the RG 23A Part I & II register. The stock was also not found during physical checks. Shri. Arun Bhartia in his statement dated 12-12-94 has admitted to receipt of 14353 kgs. from M/s Reliance Industries and texturising the same and clearance without entering in any central excise records and without payment of duty. He was also not able to co-relate the disposal of 13931.086 kgs. of texturised yarn with any duty paying documents. Thus this allegation also stands clearly established based on records and statements.
6.3 As regards the balance quantity of 17190.98 kgs., the said stock was found short during the physical stock taking conducted during the panchnama proceedings dated 26-7-94. As per the books, the appellant had a stock of 68099.46 kgs. as on 26-7-94 (59915.46 kgs. of POY Form IV register + 8184 kgs. of PTY- RG1 register). As against this the actual stock found on stock taking was 35151 kgs. (29676 kgs. of POY + 5475 Kgs. of PTY); thus the net shortage was 17190.98 kgs. The stock taking was undertaken in the presence of Shri. Jagdish Prasad Tak , factory in charge and Shri. Vinod Bhartia, Director of the appellant firm. None of these people mentioned about any stock lying as work in progress nor the panchnama proceedings record any stock lying as work in progress. Therefore, the appellants plea subsequently that these shortages were lying as work-in-progress is clearly an afterthought and has been rightly rejected by the adjudicating authority. In the light of these evidences, the conclusion of the adjudicating authority that the quantity found short was cleared by the appellant without payment of duty cannot be faulted at all. Accordingly, we uphold the duty demand confirmed in the impugned order by the adjudicating authority.
6.4 From the foregoing, it is clearly seen that suppression of production and clandestine removal of goods stand clearly established from the records and the statements of the appellants officials and directors. It is a well settled position in law that admitted facts need not be proved. The decision of the honble Madras High Court in the case of Asst. Collector of Customs vs. Govindasamy Raghupathy [1998(98) ELT 50 (Mad)] refers. There is also no retraction of any of the statements. Statements recorded under section 14 of the Central Excise Act, 1944 is a valid piece of evidence under section 25 of the Evidence Act as held by the honble Apex Court in the case of Romesh Chandra Mehta vs. State of West Bengal [1970 AIR 1940].
6.5 Once the charge of suppression of production and clandestine removal stand established, penal consequences under Rule 173Q automatically follows. Therefore, imposition of penalty on the appellant firm under Rule 173Q(1) and confiscation of land, building, plant and machinery under Rule 173Q(2) are mandated under the law and the quantum of penalty or fine imposed is not harsh or excessive when considering the amount of duty sought to be evaded.
7. In view of the foregoing, we do not find any infirmity in the impugned order. Accordingly we uphold the same and reject the appeal.
(Operative part of the order pronounced in the Court)
(Anil Choudhary) (P.R. Chandrasekharan)
Member (Judicial) Member (Technical)
Sinha
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