Customs, Excise and Gold Tribunal - Tamil Nadu
Beauty Dyers vs Commissioner Of Central Excise on 14 March, 2000
Equivalent citations: 2000(71)ECC736, 2001(136)ELT339(TRI-CHENNAI)
ORDER V.K. Ashtana, Member (T)
1. This is an appeal against Order-in-Original No. 17/88 dated 4.8.88 passed by Addl. Collector of Central Excise imposing penalty of Rs. 50,000 and confirming duty of Rs. 1,96,166.03. Appellants have pre-deposited Rs. 25,000 in terms of Tribunal's Stay Order No. E/SB/Stay/618/99, dated 10.3.99 and the balance accordingly stands waived and stayed.
2. Heard Shri S.M.S. Devadoss, Ld. Advocate for the Appellants and Ms. Aruna Gupta, Ld. DR.
3. Briefly, the charges confirmed by order impugned are as follows and are for the period from 10.7.82 to 9.5.85:
(1) Clearance of processed fabrics without duty payment though charges were collected through bills on letterheads.
(2) Clearance of processed fabrics without proper duty payment as charges were partly collected through regular invoices and partly through bills on letterheads.
(3) Clearances of processed fabrics without duty payment by misdeclaring nature of processing as "scouring" to fraudulently claim exemption, while actually goods were crinkled and dyed.
(4) Clearances of processed fabrics without proper duty payment by showing actual higher charges in customer's invoice (original) while misdeclaring lower charges in invoice to be retained in factory for audit by deptt.
(5) Clearances of processed fabrics without proper duty payment by misdeclaring counts of yarn and fabrics width (lower courts, lesser width) to avail lower duty rate.
4. Ld. Advocate submits on the first charge as follows:
(a) No opportunity given to cross-examine the exporters viz. Raj Inter Continental, Hamosons Exports & Niziam International, on whose statements, charge was alleged.
(b) Vijayan Nambiar, who had signed letterhead bills seized, left appellants employment & could also not be examined.
(c) Dept. has not correlated letterhead bills to specific consignments.
5. For the second charge, he submits that no opportunity was given to cross-examine the exporters on whose statements alone the charge was upheld viz. M/s.Gitex & Hamossons Apparels.
6. For the third charge, Ld. Advocate again pleads lack of cross-examination of Jain Handlooms, Jain Syndicate, Aarthi Exports Hindustan Garments whose statements to the effect that they had sent fabrics for only crinkling, bleaching & dyeing.
7. For the 4th charge, a similar defence is led by Ld. Advocate.
8. For the 5th charge, Ld. Advocate submits that M/s. Raj Intercontinental, Deccan Enterprises & Amaravathi Garments (on whose statements order impugned relied) had controverted their statements on examination.
9. Ld. Advocate submits that deptt. had relied on a number of statements of customers but had restricted cross-examination to 5 witnesses out of which only 3 were cross-examined. He also submitted that:
(i) Vijayan Nambiar had exceeded authority to sign letterhead bills and could not be cross-examined.
(ii) Prosecution in court on same facts had failed.
(iii) Procedure followed was known to deptt. and hence extended period was not invokable.
(iv) He cites Naveen Glass Works and , Sayaji Iront Engg. Co.
(v) Order pursuant to show cause notice dated 19.6.86 for period 1982-85 (same period) had dropped the same charge of under valuation.
He therefore prayed for setting aside the duty demand and penalty.
10. Ld. DR Ms. Aruna Gupta submits as follows:
(i) Regarding charge 1, documents clearly show quantity of receipt of grey vis-a-vis clearances of quantity of processed fabrics & that processing included dyeing details. Keshavan could not explain the discrepancies pointed out and that Commissioner's list in order is illustrative and not exhaustive.
(ii) Regarding charge 2, she stresses that statements of exporters are clearly damaging and that though letterhead bills were signed by Vijayan, they were often initialled by Keshavan. Exporter had specifically asked for the dutiable processes.
(iii) Regarding other charges, also she submits that statements of exporters conclusively sustain the charges.
(iv) Regarding non-availability for cross-examination she submits that 3 out of 5 chosen by appellants had been examined and cites decision of Hon'ble Calcutta High Court in the case of Kishanlal Agarwal in .
11. Ld. Advocate counters that in the very case cited by Ld. DR, Hon'ble High Court has also held that proper opportunity to defend himself is necessary, and that Vijayan had signed all bills unauthorisedly, hence no other could explain the discrepancies.
12. We have carefully considered these submissions and records of the case. On a careful consideration, we are of the considered view that the Revenue is only required to sustain the allegation by establishing a preponderance of probability and not on any mathematical accuracy. Therefore, the appellants acquittal in a court of law, where evidence is evaluated as per Evidence Act and accurate proofs are necessary, cannot stand in the way of our considering this preponderance of probability. We have examined the Order of Collector (Appeals) on valuation matter referred to by Ld. Advocate above. The Ld. Collector (Appeals) had merely considered whether margin of profit of customer would be includible in the assessable value and had held that this was to be excluded. As against this, the charge in this present matter is totally different i.e., misdeclaration of lower processing charges on factory invoices. The two issues are not similar and therefore Ld. Advocate's submission on this aspect cannot be accepted.
13. We are of the opinion that Vijayan Nambiar was employed by the appellants and had the authority to sign the letterhead bills because this continued for many years and it would be difficult to accept that for so many years, the management was blissfully ignorant of what Vijayan was actually doing. Secondly, it is a fact that Keshavan had initialled these letterhead bills often. Therefore, the genuineness of these letterhead bills seized by department cannot be brushed away on this ground, which is the only defence put up with respect to these bills. The only other points for determination is whether unit being in physical control, evasion alleged could have taken place and secondly the legal significance of non-availability of witnesses for cross-examination.
14. As far as the argument of physical control is concerned, we are of the view that merely because of this there could be no evasion is an unacceptable argument Firstly, physical control did not mean that the factory and its gate will be policed by excise officers round the clock and on all days. Secondly, it also did not mean that each consignment, before clearance was allowed, was subject to checks on raw-material accounts, contracts, all private records of the manufacturer like the letterhead bills etc.
15. As far as the non-availability of cross-examination of witnesses is concerned, we are of the considered view that this does not constitute a fatal flaw in the order impugned. Firstly, the department's allegations are also based on documents viz. letterhead bills and factory invoices customers invoices which had been seized. No credible explanation could be given at investigation stage. We have already rejected the explanation that these were solely Vijayan's handiwork without any authority, as discussed above. These documents told a story which was confirmed by the customers who received the processed goods in their depositions. There is nothing on record to show that these were not voluntarily given. There is also nothing on record to show that they were effectively retracted within close proximity of the Revenue obtaining them. On the contrary, none retracted them. The only discordant note is when some resiled during cross-examination at a much later date. We cannot allow this appeal only on this ground. It is not that Revenue had denied cross-examination of all witnesses. Looking into their large numbers, they had given appellants an opportunity to choose five witnesses who could be summoned. In our view, this course of action was sufficient to establish a preponderance of probability on either side. Out of these chosen by appellants, some did not respond to the summons. They were known to each other. Yet, the appellants did not extend any initiative to find out their correct whereabouts and to inform Revenue of it. Therefore, in law, their original, unretracted statements cannot be swept away as not having any evidentiary value only on this ground.
16. The overall picture that emerges out of the aforesaid analysis is that the Revenue has established a position of preponderance of possibility that the allegations are correct. Hence, we do not find merit in the appeals and the same is dismissed.