Customs, Excise and Gold Tribunal - Mumbai
S.J.N. Auto Industries Pvt. Ltd., Mr. ... vs Commissioner Of Central Excise on 27 August, 2004
Equivalent citations: 2005(98)ECC138
ORDER S.S. Sekhon, Member (T)
1. On 16/x/01, the officers of preventive wing of the Commissioner of Central Excise Mumbai I pursuant to an intelligence developed by them, searched the premises of M/s Sun Auto industries Pvt Ltd, (herein after referred to Sun for short) and a proprietary firm of Sushil Parilar, named Sumansu Enterprises, who was at the relevant time a director of Sun. They drew a panchanama, seized records & took physical stock of the goods, raw material at the factories. Issued summons and recorded statements, especially of Sh. Jaykumar Menon(hereafter referred to as Menon) another director of Sun, Shri Navin Parilkar (here after referred to as Navin) yet another director of Sun, Sushil, Shri Santosh Goerge, the excise clerk, who was supervised by Menon to comply with Central Excise matters & others. A Show Cause notice was issued on 15/4/02 demanding duty by restricting the same to & on 'Clearances effected of inputs, semi finished goods their under seizure equivalent to Modvat/CEVAT credit invalid in respect of such good, semi finished goods under seizure finished good under seizure. The Commissioner vide order dated 6/8/03 confirmed the demand, confiscated the goods valued at Rs. 6,60,175/- seized at imposed penalty under Section AC & held interest to be liable under Section 11AB & penalties under Rule 209 A on SUN, SUMANSO & NAVIN. No penalty liability was found, as regards Menon & also the other charges on SUN was dropped. Hence these appeals.
2. After hearing both sides and considering the material on record it is found-
a) The appellants have stressed upon the fact of Navin's arrest, on grounds of clandestine removal of finished goods, they have elaborated on how that was the case of the department before the Magistrate & the High Court in the bail proceedings. They have relied upon the affidavits & submissions made in those proceedings, especially the averments" there is no removal of inputs'. They have also cast doubt on and about the validity of the arrests. While this Tribunal is not sitting over the validity or otherwise of the arrest of 'Navin's the mere fact that the arrest was for clandestine removal of finished goods & averments were made by Department of 'no removal of inputs' will not ipso facto render these proceedings initiated viod, if on enquiries made such proceedings are called for.
b) 'Menon was the Director in charge & responsible for supervising the clerk locking after Central Excise matters. They have been conveniently exonerated by Revenue. Proceedings against 'Menon' have been dropped. Especially after the Commissioner has recorded that "However no reply was filed by Shri Jaykumar Menon the notice no 6" when a show cause notice was issued specially to him which avers 'as to why penalty should no be imposed on Menon under Rule 209A, that gives a strong veil to shield from liabilities the other Directors and technical persons who would & are not familiar and aware off and not responsible for day to Excise law Compliance. The Commissioner has erred in his findings & reliance by the Ld. advocate on the decision of Naguba V.B. Shen Roa AIR 1956 SC 595 is well founded.
c) Following the law on non-accountal in production records & consequent liability to confiscation & penalty is based on the decision of Bombay High Court in case of Kirloskar Brother 1988(34) ELT 301B, Hon'ble AP High Court in case of Glade Containers Castings Ltd. (1985 (19) ELT 408 AD goods were not properly accounted, confiscation & penalty under Rule 173Q could be upheld. However, the Hon'ble A.P High Court Division Branch in the case of Southern Steel Ltd Hyderabad 1979 ELT (402) does not up hold liability to confiscation, under Rule 173Q simulator non accounted when no goods are found to be removed from the factory without payment of duly. The decision of the Hon'ble High Courts bring in that liability to confiscation & penalty for goods, not entered in the registers, only when there is concurrent evidence of clandestine non duty paid removal with non accounted simplicities non accountal in registers can lead to confiscation & penalty under rule. Rule 173 Q, invoked. That was the majority view of the Tribunal, in case of Bhilai Conductors (P) Ltd 2000 (125) ELT 78 & would be thus bunking.
d) The departments case is built on statements recorded and the summary retrieved from the computer. This material has to be looked into in light of the fact of in lighting amongst the Directors. A comparison chart, prepared by the appellants Ld. Advocate of the statements recorded has been produced, a perusal of the same indicates the strong undertones of hostility on part of Shri Jaykumar Menon & an attempt to some how implicate the assessee and other Directors, without taking any blame on himself. Since Jaykumar Menon was responsible for maintenance of the Excise Records, absolving him of penal consequences, when he has not even classified his position during the enquiries or in the Show Cause notice proceedings/hearings, raise doubts about the element of Department Bias to exist as against the appellants herein, as urged, by the appellants before us. Enquiries & adjudiction orders with a trace of bias cannot be upheld. The aquital of Shri Jaykumar Menon by the adjudicator, of penal consequences, would call for acquittal of the assessee company following the law as laid in the case of Harwood Garment 2003 (158) ELT 401 SC).
e) The reliance of the Commissioner on commuter stock summary is also not well founded, for the reasons-
i) The authenticity of the weights mentioned & the hand written notations therein cannot be relied upon. The plea of the appellants that the weight of the parts as taken are arbitrary is well founded
ii) The opening stock taken as on 5/4/99 for completion to work out the quantities of inputs involved based on these computer statements prepared for Bankers & other such uses, without any authentic data on weight of parts therein can not be relied upon. The accepted position is that the assessee entered the Modvat credit on 24/11/99 & had to declare the inputs as per the rules under that scheme. The working out on certain conversion format by the department to arrive at and take opening stock position with effect from 5.4.99 when the raw materials were not inputs is therefore not upheld.
iii) It is well settled, that statements prepared, for Bankers etc, for over draft and other purposes cannot be relied upon for Excise purpose.
iv) From Annexures B the Show Cause Notice it was demonstrated that the weight of same port differs. Even in the two Panchanama ie dated 16.10.2001 & 18/10/2001 record the weight of parts (eg.Tow hooks to be as 13750 Kgs & 15.250) & this products within itself would claim to be 80% of the goods manufactured.
v) Nylon Brush weight is taken as 10Kgs when the weight of this part is only 0.015.Kg.
vi) The figure for quantity of M.S. Bright Bars is 53.100 Kgs in the stock summary report, while it is reckoned at 530...00 kgs as raw material purchases in working ' out the alleged shortage. This one error has increased the inputs receipts by 53046 kgs.
vii) The addition of receipts with effect from 1/4/99 to 23/11/99 Modvat inputs receipts have been inflated by 857.001MTS.
viii) Overlapping period in stock summary ie at period 1.4.99 to 27.4.2002 is against accounted in period 1/4/2000 to 27/4/2000 is again accounted in the period 1/4/2000 to 31/3/2001.
Notices to Show Cause & orders confirming based on the same, on such in accurate figures would exhibit a lack of application of mind, if not a deliberate act on part of the department to some how make out a case. Such orders cannot be approved.
f) The non reliance by the adjudicator & the Show Cause Notice issuing authority on the replies received from M/s Mahindra & Mahindra Ltd, the sole buyers of the assessee products, which were made to their specification & quality of the buyer, & when on the weights shown thereunder are considered & a work sheet prepared by the appellants on that data from m/s Mahindra & Mahindra is considered, the losses appear to be restricted to 2.6%. This vital piece of relevant evidence & explanation has been brushed aside by the adjudicator, only on the grounds that 'Panchanama' weights have not been disputed. When it is found that even the Panchanamas are recording different weights & there is on record appellants Director Navin's statement dated 31.10.01 to the effect.
"............ The quantity mentioned in the above document of stock summary for the period 1/4/99 to 16/10/2001 seem to be correct as far as dispatches are concerned but the weight calculation needs to be checked"
That should have induced the investigators & the adjudicators to have caused for a recheck of the weight calculations. The investigators did proceed to do so by issuing a summon to M/s Mahindra & Mahindra. They obtained the data & the assessee produced a chart on that basis. However that evidence supporting the assessees bonafides was brushed aside, since that appeared to be in convenient. The weight put in "ink"on the summary, said to be provided by Shri. Abhyanhar, by referring to records, in the case, to rebut the evidence from M/s Mahindra & Mahindra cannot be taken to be Gospel truth, when it is pointed out from the documents that the weight in ink for 'Rear Tow Hook is written as 13.5 kgs, while the notice reckons the same as to be 20 Kg. The reliance on such figures cannot be made. The order brushing aside the material, produced in defence, based, on reliable date from M/s Mahindra & Mahindra and then basing itself on unreliable data in the notice cannot be upheld.
g) The submission of the Ld. advocate that it is futile on the part of the respondent to say that creditability and acceptability of 'Panchanama' out weight the information collected from M/s Mahindra & Mahindra on summons issued under Section 14 which amount to a 'Judicial Proceedings' has force on considering the following para, relied upon by the Bombay High Court quoting Justice Beaumont with approval as to the nature & purpose of a document styled as Panchanama (see. Vishnu Krishna v. state of Maharastra (1974) 76 Bom LR.627 (F.B). The quote approved reads-
"................... The Panchnama is merely a record of what a panch sees, and the only use to which it can properly be put is that when the Panch aces into the witness box and swears as to what he saw, the panchanama can he used as a contemporary record to refresh his memory......"
[Emperor v. Mohanlal Babla (1940) 43 Bom L.R(63)] Therefore, relying on a Panchanama weight & working cut demands of duty by rejecting the information supplied by M/s Mahindra & Mahindra cannot be sustained & order impugned is required to be set aside.
h) No material of removal of the huge quantity of goods found short ie 860.94 MT where value is estimated to be Rs. 1,17,51,031 without any corresponding material about and on receipt/recovery of money or and actual transport having been effected, is a demand made on presumptions it cannot be upheld. Reliance on the case of Steel Authority of India Ltd (2001 946) RLT 701) is well founded by the Ld. Advocate, to induce us to set aside the order & allow the appeals
i) When duty demands cannot be upheld, the penalties cannot be sustained. Reliance of the appellant on AK Tantil (2003 9158) ELT 638 is well placed to call for setting aside order on the penalties.
j) As regards the seizure of goods allegedly clandestine removed, the goods are explained to have been removed for painting, cutting & fabrication somewhere in October 2001 to the premises of M/s Sumansu who had taken possession of their premises only on 1/7/2001. Therefore permitted period of 180 days was not over for the return. In the statement dated 16/10/2002, Sushail has admitted to be doing job work. Modvat challan file was seized on 16/10/2002 & the explanation were offered with challan on 28/10/2002. The adjudicator also notes such removal at para 5.1 page 14 of the impugned order & permission at page 16 of shifting of the material post seizure to Kandivili premiers. The explanation offered are therefore accepted no case or cause is made to order the confiscation & impose penalty.
k) Since no duty demands are found which could be made out, no orders on interest would survive
3) In view of the findings the order is set aside & appeals allowed.
(Pronounced in Court on 27.08.2004