Customs, Excise and Gold Tribunal - Delhi
Eskay Electronics (India) Pvt. Ltd. vs Collector Of C. Ex. on 24 September, 1991
Equivalent citations: 1992(59)ELT630(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. This is an appeal against the Order-in-Original No. 23/89, dated 28-4-1989 passed by the Collector of Central Excise, New Delhi.
2. The facts of the case, in brief, are that the appellants are engaged in the manufacture of T.V. sets. In pursuance to the information that the appellants are engaged in clandestine removal of the TV sets at a large scale, the factory premises of the appellants was visited by the Central Excise Officers of Anti-Evasion Branch, New Delhi on 23-1-1987. They took into possession several records concerning production/clearance/sale made to various customers/dealers/distributors for the last five years from Shri M.S. Kathuria, Managing Director (President) of the Company. As a follow-up action the factory premises of M/s. ESPE Industries, Noida, U.P to whom the party was found to be sending their goods for alignment and testing of semi-finished goods was visited on 9-2-1987. The business premises of M/s. Sobti Electronics, Agra and M/s. Kapoor Electronics, Varanasi (U.P.) who are the main dealers of the appellants in the U.P. were also visited on 19-2-1987 and 24-2-1987 respectively. The factory of the appellants was once again visited on 30-11-1987 and the residential premises of the President as well as the residential premises of the Nominee Director and business/office premises were also searched on 27-2-1988. From the scrutiny of the records resumed from the above-said premises and on available informations, following charges were initiated against the appellants by issuing show cause notice:
(i) Non-accountal of Picture Tubes in raw material account register.
(ii) Clearances on the strength of forged invoices of M/s. ESPE Industries, Noida, Ghaziabad, U.P.
(iii) Clearance on forged gate passes.
(iv) Clearance on the original gate passes to cover the transportation being different from 2nd and 3rd Copy of same Gate Pass.
(v) Clearance on Duplicate Sales invoices.
(vi) Clearances on Printed Challans/Kuchha Slips.
(vii) No. of repairs of TV sets exceeding the production shown by them.
(viii) Television Sets received for repairs under Rule 173H in the factory of production.
(ix) Under-valuation of their product during the period prior to 17-3-1985 when the duty rates were on ad valorem basis.
(x) Realising after sales service charges ranging from Rs. 100/- to Rs. 840/- per set for black and white television sets, but not accounted properly.
After considering the detail written and oral submissions made by the party, Principal Collector who conducted the proceedings confirmed these charges raising excise duty amounting to Rs. 65,83,506/- under Section 11A of the Central Excises and Salt Act. He observed that this consists of duty of excise on goods clandestinely removed by the appellants without accountal thereof in statutory central excise records and also on account of undervaluation of goods. He ordered absolute confiscation of 6 T.V. sets seized by the Central Excise Officers on the ground that the appellant Company has not been able to prove that the same were cleared on payment of central excise duty. He concluded that T.V. bearing Chassis No. 10069 were cleared under G.P.I. No. 13 dated 6-1-1988 was not proved. He also held that in respect of sets received for repairs the party has failed to provide evidence that these were originally cleared on payment of central excise duty. He further confirmed duty of Rs. 11,100/- on the seized sets already cleared from the factory premises without payment of central excise duty. In addition to this, personal penalty of Rs. 20 lakhs was imposed on the appellants under Rule 173Q of the Central Excise Rules, 1944, for infringement of provisions of central excise law. Aggrieved by this order, the appellants have come before us by way of this appeal.
3. Shri Y.N. Chopra, learned Consultant, appearing for the appellants, submitted that this matter will have to go back for de novo adjudication as the order suffers from denial of principles of natural justice. He said that apart from the merits of the case principles of natural justice have not been observed as the appellants were not allowed to cross-examine the persons whose statements have been relied upon. Neither the statements nor the concerned documents were shown to the party, nor copies of the same were supplied to the party for rebuttal. He drew our attention to page 21 of the impugned order wherein it was stated "though the Advocate had desired cross-examination of all the persons on whose statements the reliance had been placed in the show cause notice, I hold that considering the circumstances of the case and the nature of the evidence since all the statements have been recorded under Section 14 of C.E. & Salt Act, 1944, the cross-examination is not essential." He said that in the following instances where the appellants had specifically requested to let them examine the documents relied upon in the show cause notice but not only the following documents have not been shown to them, the Collector has not even considered their request in the impugned order:
(i) The Gate passes on which the signatures of the Inspector alleged to have been forged.
(ii) Documents/papers relied upon in the show cause notice of U.P. Sales Tax authorities to show as to who obtained the U.P. Sales Tax barrier stamps.
(iii) Bill Books enlisted at Item Nos. 11, 12, 13 of the Resumption memo dated 9-2-1987 to show that they were used by ESPE on goods cleared without payment of duty by them.
(iv) Bills relating to the period 5-8-1986 to 5-10-1986 have not been given to them, although one such Bill No. 82 dated 5-9-1986 has been quoted on page 10 of the show cause notice.
He drew our attention to the specific request made by the appellants with reference to this document in reply to the show cause notice and submitted that since these points were not covered in the impugned order, it is a non-speaking order and is liable to be set aside. He said that in respect of the tubes alleged to have been found short it was stated that they were lying in the godown hypothecated to National Small Industries Corporation. Neither the Investigating Officers nor the Adjudicating authority have verified the correctness of the statement. He said that the Collector erred in applying average charges even for the period July 1984 to March, 1985 on the basis of assumption only. Though it is admitted fact that service charges were charged at the different rates for different models but still the Collector erred in taking average figures when the actual figures were available.
On the other hand, Shri V.K. Jain, learned SDR reiterated the findings given by the Collector and said that Collector has not allowed cross-examination as the statements have been recorded under Section 14 of the Act. However, he conceded that there appears to be no finding on the point whether the documents mentioned by the appellant's counsel were actually supplied/shown or not and, therefore, he leaves it to the Bench on the point of denial of principles of natural justice. He also conceded that there is no specific finding in the impugned order whether the tubes in question were physically available in NSIC's godown as it was urged by the appellants' counsel. As regards service charges, since the charges have been varying Rs. 100/- to Rs. 840/- as can be seen as per findings of the Collector in para 14 of the impugned order, he said that Collector is justified in taking the average figure of Rs. 400/-.
We have considered the arguments advanced on both sides and perused the records. After hearing the arguments with reference to the facts of the case, we find that order suffers from denial of principles of natural justice as it was rightly argued by the appellant's counsel. The defence of the party since beginning is that on the back of entire search and seizure operation there was a deep conspiracy on the part of their competitors in the business and their disgruntled staff. As can be seen from the records, the Collector has proceeded to pass the order not only based upon the seized documents and records available in the factory premises but also on the statement of dealers and workers of the appellants' factory. In view of this fact the Collector ought to have considered the request made by the appellants to allow them cross-examination of the persons whose statements he has relied upon in arriving at the conclusion. He was not justified in rejecting the request made by the appellants on the ground that these statements have been recorded under Section 14 of the Act. Since the documents were very much relied upon in arriving at the conclusion, he ought to have allowed cross-examination of the concerned persons as request made by the appellants was a reasonable one. With these observations, we are remanding the matter to the concerned Collector for de novo adjudication with a direction to allow the appellants for cross-examination as requested and to supply the documents/statements relied upon and to pass an appropriate order after giving sufficient opportunity to the appellants.
6. Thus, the appeal is allowed by remand.
S.K. Bhatnagar, Vice President
7. While agreeing with my learned brother Hon'ble Member (Judicial) Shri G.A. Brahma Deva, that a remand is called for, I would like to observe as follows:
8. It is well settled that in any quasi-judicial proceedings before the departmental officers, technicalities of Evidence Act do not apply; but principles of natural justice are required to be observed. It is also well settled by now that cross-examination is neither an essential part of principles of natural justice nor that of above type of proceedings. However, it may be allowed at the discretion of the adjudicating officer wherever and whenever considered necessary in the interest of justice. By the same token it could also be disallowed for good and sufficient reasons to be recorded in writing. But fair play in administration being essential, the discretion in the matter was required to be exercised judiciously. It is in this context that I consider that cross-examination could not be disallowed merely on the ground that the statements have been recorded under Section 14 of the Act and the request was required to be considered in the light of the facts and circumstances of the case, the above principles and the justification advanced.
9. That apart, in so far as the charge of forgery is concerned it is a very serious one and the documents alleged to have been forged were required to be supplied/made available for inspection and the reasons were required to be indicated in the normal course. As admittedly the order was silent on this point the department was required to supply or show the documents and allow them to take copies thereof.
10. Furthermore the aspect of so-called defective tubes and those tubes which were said to be lying in the godown hypothecated to NSIC is also required to be re-examined at length and a finding was required to be recorded, inter alia, on the point whether there were any tubes in NSIC godown and if so whether they were good or defective and the bearing of these aspects on the case.
11. Further in so far as the charge of undervaluation is concerned, the Collector has merely observed that "I also find that the party was clearing colour TV sets to the value of Rs. 3000" but the Collector does not state that if the goods were undervalued, how they were reassessed and how the revised value was arrived at.
12. It was necessary that full details indicating, inter alia, the basis of assessment were indicated and a: clear and specific order was passed in this respect as well.
13. The learned Collector may keep these observations in mind while read-judicating the case and may pass appropriate orders after allowing the appellants an opportunity of being heard in the matter.