Customs, Excise and Gold Tribunal - Mumbai
Padmanabh Dyeing And Finishing Work vs Collr. Of C. Ex. on 5 August, 1996
Equivalent citations: 1997(90)ELT343(TRI-MUMBAI)
ORDER P.K. Desai, Member (J)
1. Though both the appeals arise out of different orders-in-original, as both the appellants are the sister concerns and have identical issues for consideration, both were argued together and are being disposed of by this common order.
2. Appeal No. E/249/87 of M/s. Padmanabh Dyeing and Finishing Works is in relation to Order-in-Original No. 4/MP/87 and Appeal No. E/250/87 of M/s. Padmanabh Silk Mills is in relation to the Order-in-Original No. 3/MP/87, both dated 29-1-1987 passed by the Collector of Central Excise, Vadodara.
3. The factory premises of M/s. Padmanabh Silk Mills engaged in manufacture/processing of Man-Made Fabrics were visited by the officers of the Central Excise Department on 11-6-1983 and on physical verification, they found certain discrepancies in the nature of variation in length, non-accountal in the statutory Registers etc., in relation to Lot Nos. 269, 274 and 309 and hence placed 18 pcs. admeasuring 1871.50 L. Meters under seizure. As they were in semi-finished condition, the said Mill was permitted to complete the process. The officers also found some loose sheets containing details of design, lot numbers with number of pieces, names of concerned parties and quantity of fabrics processed/printed in relation of certain Lot numbers and of comparison it was worked out that 23,735 L. Meters of processed MMF valued at Rs. 2,61,694.68 ps. were removed without payment of duty and without being reflected in their statutory registers. During the course of further investigation, it was found that this Mill had got some processing work through 10 different Contractors and investigations were carried out where an inspection of various books maintained by those Contractors as also considering the electricity consumed during the said period, it was ascertained that the Mill had illicitly processed 13,57,372 L. Mts. of fabrics and had removed them without payment of appropriate duty. Show Cause Notice dated 8-12-1983 was therefore issued and on adjudication the impugned order for confiscation of excess quantity seized and for recovery of duty and for imposition of penalty was passed. The duty demand has been quantified at Rs. 8,80,225/-.
4. The officers of the Central Excise Department also visited the factory premises of M/s. Padmanabh Dyeing and Finishing Works and found discrepancies in relation to Lot Nos. 1418 and 1425 in the nature of description of goods etc. and seized 33 pcs. admeasuring 3133.50 L. Mts. They also found certain loose sheets containing various details indicating processing of the goods which on verification, were found to have been processed and removed without payment of duty. There was also a shortage of 1668.35 L. Mts. It was also revealed that the assessees had got certain quantity of fabrics - processed through various Contractors and on verification of their accounts and the other evidence, ascertained processing and removal of total quantity of 5,60,594 L. Mts. of fabrics without entry in records and payment of duty. Show Cause Notice dated 3-12-1983 was therefore issued and on adjudication the goods seized were ordered confiscation and duty demand subsequently worked out at Rs. 3,58,886/- was confirmed and personal penalties have also been imposed.
5. Mr. Willingdon, the ld. Advocate appearing for the Appellants in both the cases has submitted that he is pressing the appeals in relation to alleged clandestine removal of fabrics admeasuring 13,57,372 L. Mts. in relation to M/s. Padmanabh Silk Mills and of fabrics admeasuring 5,60,594 L. Mts. in relation to M/s. Padmanabh Dyeing and Finishing Works as also order of confiscation of the seized goods and of imposition of personal penalties and that he is not pressing the other points raised.
6. As regards orders of confiscation and of imposition of personal penalties are concerned, the ld. Advocate has submitted that the demands raised and consequential order of confiscation and imposition of penalties are under the provisions of Additional Duties of Excise (Goods of Special Importance) Act, 1995, and that the seizure being of the year 1983 pre-amended Section 3 of the said Act would apply and vide judgments of the Delhi High Court in Pioneer Silk Mills v. U.O.I. - 1995 (80) E.L.T. 507, duly followed by the Tribunal on Syntex Processors v. Collector - 1994 (71) E.L.T. 386 (Tribunal) and Rajasthan Processor v. Collector 1994 (3) RLT 157 (CEGAT-A) no order for confiscation of goods or imposition of penalty could be passed. In his submission therefore, both the orders deserve modification to that extent.
7. In relation to the excess production and illicit removal, the ld. Advocate has pleaded that the findings are based merely on conjectures and surmises and the conclusions are mainly based on electric consumption. In his submission, the basis for drawing the conclusion is unwarranted and in support of his submission, has relied upon the judgment of Kerala High Court in George Varghese v. Collector - 1992 (60) E.L.T. 361 (Ker.) as also the orders of the Tribunal in Premier Packaging v. Collector - 1986 (8) ETR 449, Ambica Metal Works v. Collector - 1990 (29) ECR 549, System Electronics v. Collector - 1992 (20) ETR 108, Central Construction and Engineering Co. Ltd. v. Collector - 1994 (72) E.L.T. 777; K. Harinath Gupta v. Collector - 1994 (71) E.L.T. 980 and Madhu Food Products v. Collector - 1995 (76) E.L.T. 197.
8. Mr. V.K. Puri, the ld. SDR has however pleaded that the decision of the Delhi High Court in Re : Pioneer Silk Mills (supra) is under challenge before the Supreme Court and the decisions of the Tribunal are based on the said decision and hence, it cannot be accepted as laying down any law and hence conclusion need not be based on the same. In his submission, there is a contravention and evasion of duty warranting confiscation of seized goods and imposition of personal penalty. He also pleads that the clandestine removals have been admitted by the partner of both the firms, Mr. Gandhi and besides that, enquiry is also made with Gujarat Electricity Board as to consumption of Electricity. In his submission the documentary evidence produced duly establishes extra production and there is nothing to show that such extra production was removed on payment of duty and therefore, has to be taken as removal without payment of duty. He has referred to the Supreme Court judgment in Triveni Rubber v. Collector - 1994 (73) E.L.T. 7 (SC).
9. Considering the submissions and going through the records, when the points other than those specified hereinabove have not been pressed, they need not be scrutinised. Even otherwise some excesses and shortages have been found on physical verification and some documents in the nature of Chits giving details are found and hence, those points even if pressed, might not have resulted in any interference with the order.
10. As to order of confiscation and imposition of personal penalties, the view as adopted by the Delhi High Court in Re : Pioneer Silk Mills (supra) appears to have been accepted as correct one, as is evidenced from the fact that subsequent to the said judgment, Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 has been suitably amended to overcome the effect of the said judgment. The amendment is neither stated to be merely of clarificatory nature, nor is made operative retrospectively. The confiscation and the penalties imposed are stated to be in relation to evasion of the Additional Duty of Excise only. The ratio of the said decision therefore would squarely stand attracted here and hence the orders of confiscation as also of imposition of penalty in relation to both the orders appealed against, have to be set aside.
11. So far as the alleged clandestine removal is concerned, the allegation is that M/s. Padmanabh Silk Mills have removed 13,57,372 L. Mts. and M/s. Padmanabh Dyeing and Finishing Works had removed 5,60,594 L. Mts. Admittedly there is no direct evidence as to such removals and conclusion in that regard has to be drawn merely on circumstantial evidence.
12. The authority below seems to have principally relied upon the electricity consumption, in both the units to work out the probable production and the explanation given is reported to have been verified from the Electricity Board and is reported to be not a correct one. In relation to M/s. Padmanabh Silk Mills, they have taken the production of 4.96 L. Mts. per unit achieved in July, 1982 and for M/s. Padmanabh Dyeing and Finishing Works the production for the month of March, 1982, which is 4.87 [L. mts.] per unit. Apart from the objection raised that Electricity consumed may not by itself be sufficient criteria to assess the production, it is not projected as to whether the production per unit of Electricity consumed, as specified above, was the normal production ratio earlier or was just a one time achievement, as if it could be only in one time achievement, the same cannot be accepted as a standard to conclude that they had maintained the said ratio all through out for further production and had thus processed more quantity of fabrics then the one shown in the record. If a particular standard has to be accepted, it has, first to be established as a standard. No data is available on record to indicate that ratio of 4.96 L. Mts. per unit in one case and 4.87 L. Mts. per unit in another case, was the standard and not a one time achievement and if the production is worked out only on that basis, there are all probabilities that the figure worked out may not be correct one. It has therefore been held - essential to have some corroborative evidence to substantiate that the consumption of electricity could be one of the justifiable criteria. The evidence of this type may be of a corroborative nature rather [than] the basic evidence.
13. The Case law cited also lays down the same and out of the decisions cited by the ld. Advocate for the Appellant, the one of the Tribunals in Madhu Food Products v. Collector (supra) is directly on the same issue. The Supreme Court have in Re : Triveni Rubbers (supra) also before them some other corroborative evidence.
14. There is no evidence in either of the matters as to source of acquisition of raw material nor is there any other evidence showing clandestine removal.
15. Investigations have been carried out with some other parties which have done some processing and some registers in the nature of man power employed and payments made to the labourers has been procured. The investigations however appear to have stopped at that stage and no nexus thereof with alleged excess production appears to have been established, as to work out the excess production for which the demand is raised. The figures appears to have been arrived at only on the electricity consumed during the relevant period, which for the reasons already stated earlier, cannot be accepted as the standard.
16. Thus, the excess production of 1 3,57,372 L. Mtrs. and 5,60,594 L. Mts. worked out for M/s. Padmanabh Silk Mills and M/s. Padmanabh Dyeing and Finishing Works, thus appear to have been worked out on the data which cannot be - considered on adequate and demand based on such inadequate data cannot be sustained and same require to be set aside.
17. In the result, both the appeals are partly allowed and while setting aside the orders of confiscation and of imposition of personal penalties as also of the demand of duties in regard to alleged clandestine manufacture and removal of 13,57,372 L. Mtrs. for M/s. Padmanabh Silk Mills and of 5,60,594 L. Mts. for M/s. Padmanabh Dyeing and Finishing Works, rest of the orders are confirmed. Consequential reliefs to follow.