Customs, Excise and Gold Tribunal - Tamil Nadu
International Computer Ribbon Corpn. vs C.C.E. on 10 November, 1994
Equivalent citations: 1995ECR405(TRI.-CHENNAI), 1995(76)ELT334(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. The stay application has been filed for dispensation of pre-deposit of duty of Rs. 46,93,833 demanded in terms of the impugned order and also penalty of Rs. 7,00,000/- imposed on the appellants/applicants in terms of the said order. Apart from it, some goods and also Plants and machinery of the appellants have also been confiscated and allowed to be redeemed on payment of fine of Rs. 1,79,070.00/-.
2. Shri Raghavan, the learned Counsel for the petitioners/appellants contended that the impugned order is not sustainable either in law or on facts for many reasons. It was urged that for the period Sept. 1990 to Feb. 1991, the Asstt. Collector of Central Excise, Madras-Ill Division, after elaborately going into the entire evidence collected during investigation by his Preventive Staff, issued a show cause notice on 19-3-1991 restricting the demand only for a period of six months presumably not finding in the evidence already collected any suppression on the part of the appellants. The appellants also paid duty of Rs. 1,21,548.87 under protest, for the said six months period. Subsequently after a lapse of nearly one year on the same materials and evidence collected and which had already been gone into by the Asstt. Collector, Ld. Collector initiated proceedings for longer period inter alia covering the period covered in the show cause notice of the Asstt. Collector cited supra and passed the impugned order. It was submitted that when one statutory authority did not find any evidence for suppression and restricted the demand for a period of six months it will not be open to another authority after a lapse of one year to reopen a closed issue relating to suppression on the same identical evidence. This was pleaded to be not in conformity with procedural fairness in law. The learned Counsel further submitted that the appellants are manufacturing computer ribbons and are also re-inking manufactured and duty paid ribbons collected from various customers for purpose of re-using & re-conditioning the same by conforming to the provisions of Rule 173H of the Central Excises and Salt Act, 1944. Since 1987 onwards, the appellants had been receiving used ribbons for re-inking to the knowledge of the Department and this fact is also admitted by the Department in the show cause notice and also in the impugned order. In respect of such re-conditioned duty paid ribbons, the appellants filed D-3 intimations in all the cases right from the beginning and also enclosed the gate passes etc. with the RT-12 returns. The appellants also, in terms of Rule 173H, maintained form V, containing all the relevant particulars with reference to the quantity of duty paid ribbons received for re-inking, repair etc. and removed under gate passes. RT-12 returns filed have also been periodically assessed by the Department. Therefore, in such a situation, the question of suppression does not arise at all. The learned Counsel further submitted that the appellant had stored all the necessary information regarding re-inking, raw material purchases, manufacturing details, storing and sale details and despatch particulars in 108 floppy disc, which were seized by the Deptt. The Department has only relied upon those 108 floppy discs in which all the information had been stored in determining the demand under the impugned order. Even though the appellants specifically asked for those floppy discs in a bid to demonstrate and reconcile their plea with reference to the receipt of duty paid old ribbons for re-inking, the Dept. gave only 30 floppy discs for reconciliation process and did not give the balance resulting in not only violation of principles of natural justice but grave miscarriage of justice in depriving the appellants a proper and reasonable opportunity.
3. Shri J.M. Jeyaseelan, the learned DR at this stage intervened to submit that even though mention is made about the D-3 intimation, no plea would appear to have been taken with reference to RT-12 assessment and therefore, he would like to take instructions and get the RT-12 assessment records to appreciate the plea canvassed by the learned Counsel for the appellants. Shri P.R. Prasad, the learned SDR intervened to submit that if the plea of the appellants that the entire intimation had been stored in 108 floppy discs, on which reliance is placed in the show cause and in the impugned order for determining the levy in question and if the same had not been made available to the appellants with opportunity for reconciliation and if the appellants are prepared to reconcile from the floppy discs by bringing out the necessary information in support of their plea, the matter may be remanded as such an examination will not be possible before the Tribunal.
4. In view of the above, after hearing the learned Counsel for the appellants, with the consent of the parties, it was felt that the appeal itself could be disposed of on a short point of law dispensing with the pre-deposit of duty and penalty in question.
5. The learned DR submitted that the charge against the appellants relates to supply of new ribbons in the guise of old ribbons and also removal of new ribbons clandestinely. He pleaded that the intimation under D-3 was filed by the appellants in respect of used ribbons received by them and these were their own documents. The gate pass numbers mentioned in the D-3 intimation were found to be not correct in some of the cases. He pleaded that dealers who had received the so-called re-inked and repaired ribbons have also stated that they received only new ribbons and paid the price for new ribbons. There is evidence to show that the dealers did not send any old ribbons. In this context he referred us to paras 9 to 12 of the show cause. He pleaded that the Collector had entered a categorical finding on the pleas made by the appellants. He pleaded that it was for the appellants to establish that the ribbons which were received for re-inking etc. had been sent back after re-inking and also correlate the same with the original ribbons which after receipt had been sent back. At this stage the Bench enquired from the D.R. whether any verification of the D-3 was done at the consignor's end and the result of the investigation was given to the appellants in respect of the same, he pleaded that the D-3 intimation are not genuine as gate pass numbers were not tallying with the names of the consignors and the gate passes mentioned in the D-3 intimation were not relatable to the consignors who are stated to have sent the ribbons for re-inking. He however, could not show any verification having been done in this regard. He however, conceded that no doubt in some cases the particulars given in the D-3 intimation were found tallying in respect of the ribbons sent to the appellants by M.R.L. and others. He pleaded that statements of the employees also did not support the case of the appellants and he referred us to the Annexure to the show cause notice containing the statements of Vembu and Hema. He pleaded that as it is the lower authority has given a finding in paras 105 to 108 of the impugned order as to the modalities of evasion adopted by the appellants. He pleaded that the appellants were maintaining two sets of records and the production figures in RG-1 Register were not tallying with the figures in the other private records. He pleaded that the floppy discs were given in Sept. 1988 and the appellants have not immediately complained about the defects in floppy discs. It was only at a later date that request has been made for fresh copies of the floppy discs. He pleaded that the prints out from the floppy discs were given and the work sheet was also provided and the appellants could have met the charge by utilizing the information given in the prints out. He pleaded that amongst the documents seized some packings and inspection slips were also there which also point to the evasion by the appellants. He, therefore pleaded that at this stage, the appellants could not plead denial of principles of natural justice and there is nothing to show that any information was held back from the appellants.
6. Shri Raghavan, the learned Counsel for the appellants pleaded that the appellants had come on record in regard to their operations and sales pattern and had marked in the invoice and other documents with notations RC, RR, RI which stand for Reconditioning, Rectification and Re-inking respectively, which were filed before the authorities and there were also necessary packing slips, delivery challans, work order job, tickets which have been seized by the authorities. The gate passes under which the ribbons re-inked and the cassettes have been removed and the invoices under which the same were removed and the operations of the appellants can be assessed from the invoice, delivery challans, packing slips and job tickets and these would link the work done by the appellants and these details have been fed into the floppy discs which have been seized by the authorities. He pleaded that the goods were removed under proper documents and as it is, it is these documents would link-up clearances with the appellants D-3 intimation. He pleaded that a number of ribbons for re-inking were handed over by the persons concerned to the appellants Unit and details given by the appellants in the D-3 intimation were based on the documents under which cassettes have been supplied to them by their customers. He pleaded that even if there is any discrepancy in regard to the gate pass numbers in the documents under which the goods have been received back that would not make for any case against the appellants in as much as the appellants had done necessary job work of re-inking, repairs. There is no allegation that the appellants had manipulated any records on their own to cover up for any new cassettes manufactured in the grab of re-inking or repairs of old cassettes. Even in Annexures 4 & 5 while the number of cassettes removed are shown month-wise no details have been furnished to the appellants. He pleaded that no adverse inference can be drawn from the statements of Vembu and Hama as they only confirm regarding the re-inking of the ribbons. He pleaded that the appellants maintained their records scrupulously which have been perused by the departmental authorities all along and the Ld. lower authority should have gone into these records before entering a finding of suppression of facts and the results of the investigation in regard to the D-3 intimation which had been given by the appellants should have been made available to the appellants. He pleaded that for some period they were charging the prices of the new cassettes for repaired/re-inked old cassettes but that does not in any way detract from the appellants plea that they had done re-inking and repairing of the old cassettes and no duty can be demanded in respect of those cassettes. He pleaded that the authorities has done investigation and relied upon different sets of documents for different period which were not permissible in law. In support of his plea, he cited the case reported in 1994 (73) E.L.T. 142 (Tri.). He pleaded that the appellants are manufacturing new ribbons out of the Jumbo rolls which were imported and no case has been made out against the appellants that out of the Jumbo rolls imported by the appellants, they could have produced larger number of new ribbons/cassettes as alleged by the departmental authorities. He pleaded that the Departmental authorities should have correlated input materials with the production of new cassettes which was not done. He pleaded that the appellants have fed the information in regard to the utilisation of the imported rolls in the floppy discs which have been seized by the authorities and the copies of which given to the appellants were found to be defective except in case of 30 floppies and the appellants had prayed for fresh copies and other documents to put forth their defence and the learned lower authority should have given all the documents in which the figures of manufacture and/or sale of cassettes was reflected to the appellants before coming to any conclusion against the appellants. He pleaded that the Departmental authorities have culled out information from the floppies and the appellants should have been allowed access to those floppies which has not been done. He pleaded that this should have been done before adjudication of the matter and the lower authority in a very summary manner in paras 115 and 116 of the order has dealt with this issue. The learned Counsel, therefore prayed for setting aside the order of the lower authority.
7. We have considered the pleas made before us. The demand has been raised against the appellants for the reason that the appellants in the garb of re-inking and repairing of computer ribbons had cleared new cassettes without payment of duty and also cleared the goods without accounting for the same as they had manufactured and clandestinely removed large quantity of cassettes. We observe that so far as the re-inking of the cassettes are concerned, the learned lower authority in his order has entered a finding that in respect of some major organisations like MRL from whom cassettes had been received for re-inking, the particulars furnished in D-3 intimation were found tallying. The question therefore, to be considered is what is the quantum of these ribbons brought for re-inking and whether the appellants had been guilty of any suppression in this regard. We observe that it is a matter of record that the appellants had been filing D-3 intimation and also maintained necessary record prescribed in regard to the same. During the relevant period the appellants had also been filing the necessary RT-12 returns as seen from some of the copies filed by the appellants and filed alongwith them record of clearances of the re-inked and repaired cassettes (ribbons). The appellants have also pleaded that they had been maintaining elaborate accounts of the cassettes, such as job tickets, packing slips, delivery challans, and invoices etc. copies of which were also filed alongwith RT 12 returns and the notations as to the nature of work done such as RC, RR, RI etc. which stand for Re-conditioning, Rectification and Re-inking respectively are indicated to distinguish from the ribbons (cassettes) which were to be cleared on payment of duty. The plea is that these records have been seized by the authorities. The question therefore, that arises in this context is when the appellants have been filing the necessary returns before the departmental authorities whether there can be any suppression on the part of the appellants. What has to be considered in such a situation is whether the assessee was holding back any information from the authorities or falsifying/manipulating the records to derive any particular benefit. We find that the learned lower authority has not addressed himself to this question taking into consideration the range of the appellant's operations and the documents/records maintained by them and the periodic checks done by the authorities of the various statutory records maintained by them and check of the document filed by them as statutorily required in terms of Rules 173H and other Central Excise Rules. Merely stating that only some of the cassettes received for re-inking were returned is not enough. The authorities should have given the result of the investigation in regard to the D-3 intimation and also in regard to the discrepancies found. This not having been done, we hold that the order cannot be considered as a proper one. In regard to the plea that the appellants have been denied access to information as contained in the floppies as except for a small number copies supplied were found defective and information could be retrieved only from a small numbers, out of the total of 108 floppies, it is observed that the appellants had made their plea in this regard before the learned lower authority and the said authority has noted this plea in para 115 which is reproduced below for convenience of reference :
"Their next averments are that they have not been provided with all the informations Contained in the floppies seized from them and also were not provided with the relevant details with regard to Annexures III, IV and VI of the Show Cause Notice and as such, they were handicapped to offer proper explanations to the charges made in the notice."
The learned lower authority's finding in this regard is given in para 116 of his order which is reproduced below for convenience of reference :
" In this connection it is observed that it is a fact that 108 floppies were seized from the factory in connection with the case. It is also a fact that the floppies were made use of by the investigating officers to gather particulars of value of clearance to arrive at the quantum of duty to be demanded from the noticee. Therefore, it could be seen that relevancy of the floppies were only to gather particulars from one source than going through number of invoices individually to total up the value of clearances. Further the informations contained in the floppies would have been fed into them based on some basic documents and as such, the noticee could have made use of the documents to put up effective defence. Failure to do so would lead one to conclude that they have no explanation to offer to refute the charge."
The learned lower authority, as could be seen from his observation extracted above, has gone on to say that the appellants could have made use of the other Documents to put forth their defence as the relevancy of the floppies was only gather information from one source. We observe that the appellants had imputerised the data and the full data entered in respect of their operations would be relevant and the appellants have the right to interpret the full data enttered in respect of their operations, in the floppies to put forth their defence. the appellants in the absence of the information from the floppies should have been given copies of documents which were relatable to the quantities cleared and manufactured. The learned lower authority instead of referring to the appellants' documents which were relevant has merely observed that the ap-pellants would be knowing about the documents based on which the informa-in was fed on the floppies. We observe that it was incumbent upon the lower authority to relate the documents with the date on which demand has been raised. We observe that the learned lower authority has not been fair in his approach in asking the appellants to get the information from other docu-ments. As it is, the plea is that the documents had been seized by the authorities and it is expected that these would have been scrutinised by the authorities and it should not have been difficult for the authorities to have furnished the copies of the same in case the copies of floppies could not be given. In view of the above, there is force in the plea of the appellants that in the absence of copies of floppies or the other relevant documents having been made available to them, they were handicapped in their defence. No doubt it is shown from the records that copies of the floppies had been given to them, but the appellants had found the same to be defective and the authorities in fairness should have given the copies of the floppies again. The appellants would know better about the information fed into the floppies and the relevance of the same cannot be disputed. Since the authorities have not given copies of all the floppies or other relevant documents as above, and also the investigation report it has to be held that there has been denial of principles of natural justice. In view of the above we set aside the impugned order as not proper and remand the matter for de novo consideration after affording the appellants an opportunity of hearing in the light of our findings above. In as much as the matter involves large revenue the appellants are directed to co-operate with the authorities for disposal of the case as expeditiously as possible in the de novo proceedings. The appeal is thus allowed by remand.