Customs, Excise and Gold Tribunal - Delhi
M.R. Tobacco Pvt. Ltd. And Mr. Chander ... vs Commissioner Of Central Excise on 7 June, 2006
ORDER T.V. Sairam, Member (T)
1. These are appeals filed by M/s. M.R. Tobacco Pvt. Ltd. and Shri Chander Kumar, Director of the said company challenging the order of the Commissioner of Central Excise, Delhi-1. In the impugned order, the Commissioner had confiscated the seized goods and tempo and raised demand of duty amounting to Rs. 84,900/- and also Rs. 29,70,823/- said to be evaded on the offended excisable goods during the period 17.1.2002 and 18.2.2002. Besides this, the Commissioner has also imposed penalty of Rs. 30,55,723/- on the party and Rs. 1,00,000/- on the Director. The said order also appropriates Rs. 20,00,400/- already deposited by the appellants towards payment of Central Excise duty demanded above. The entire case revolves around the interception of one tempo caught red handed carrying goods manufactured by the appellants without any evidence of payment of Central Excise duty as well as the goods alleged to have been removed in a clandestine manner, relying on certain loose sheets, which were recovered from the factory premises during the follow up investigation, endorsed in the statements of the Director, Accountant and the Production Supervisor of the company.
2. Show cause notice issued to the appellants on 14.08.2002 alleges evasion of excise duty by the appellants against a backdrop of the following events:
(1) Interception of the tempo carrying the excisable goods (pan masala/Gutka) without evidence of payment of duty on 19.02.2002.
(2) Central Excise Officers visiting the premises of the appellants to discover that 26 machines were actually running making excisable goods as against an intimation given to the department according to which only 14 machines were engaged by the appellants in their factory;
(3) Unearthing of the two godowns which were not earlier disclosed by the appellants in which excisable goods manufactured by them were found stored without evidence of payment of duty and (4) Recovery of loose sheets from the factory premises showing date-wise removal of borries of "PANKING" brand gutka manufactured by the appellants between 07.01.2002 and 18.02.2002.
3. The Commissioner of Central Excise after extending opportunities of hearing to the appellants has come to the following conclusions vide his order dated 30.9.2003:
(1) That the interception of tempo carrying goods without any duty paying documents and subsequent admission by the Supervisor/Director and Accountant corroborates that the appellants were engaged in clandestine clearances.
(2) That during the investigation, the appellants have paid Rs. 20,00,400/- towards duty proves that the goods were liable to seizure as they were cleared without payment of duty;
(3) That the contents of the panchnama were duly authenticated by the panchas:
(4) That the Accountant after fully understanding the consequences, has admitted its correctness proving thereby that the recovery of loose sheets/loose papers was made from the appellant's premises.
(5) That the interception of contraband goods on 19.2.2002 is an evidence by itself to prove that the appellants were indulging in clandestine clearance.
(6) That the duty calculations made by the Department were not as per 14 installed machines but as per evidence collected and further admitted by the appellants.
(7) That the details mentioned in the loose slips were admitted by all concerned as clearances from the unit without payment of duty.
(8) That even in a subsequent statement recorded after approximately two months of gap, the accountant had admitted before the excise officers that the clearances made by them were without payment of duty.
4. The learned Commissioner while coming to the conclusion has relied on the ratio of the decisions of this Tribunal in the following cases:
(i) In Alwar Processors (P) Ltd. v. Commissioner of Central Excise, Jaipur it was held that non payment of duty as admitted by the Authorized Signatory, Director and Clerk of assessee Company in their statements given before Revenue Officers and which were neither modified nor retracted was sufficient evidence for confiscation and penalty
(ii) In A.K. Engg. Co. v. Commissioner of Central Excise, Calcutta-1 it was held that the charge of clandestine removal was sustainable when, on interception of vehicle transporting goods without payment of duty, totality of evidence by way of statements both of Proprietor and Manager admitting to manufacture of goods without maintenance of accounts, removal thereof without payment of duty and a private notebook recovered all constitute the evidence thereof.
(iii) In Universal Radiates Ltd. v. Commissioner of Central Excise, Coimbatore 2002(148) ELT 1193 (Tri.-Chennai) it was held that admission made by the Purchase Assistant, Authorised Signatory that there was clandestine manufacture and removal of goods, and such admission never resiled at anytime, findings of manufacture and clandestine removal of goods as arrived were quite reasonable.
(iv) In Collector of Central Excise, Ahmedabad v. Vidya Wires ) P. Ltd. 2002 (149) ELT 1448(Tri.-Del.) it was held that once Managing Director of assessee's firm admitted the removal without payment of duty, preponderance of probability in regard to clandestine removal was in favour of Department and the assessee could not be lightly let off.
5. While concluding the Commissioner has thus found that the party has clandestinely manufactured and removed various brands of gutka without payment of Central Excise duty and without observing provisions and procedures of Law. He has also found the Director of the company instrumental in clandestine removal of the impugned goods as he was concerned with transportation, removing and selling of the goods which he knew were liable to confiscation.
6. Being aggrieved by this order of the Commissioner appellants have filed this appeal.
7. The learned Counsel for the appellants states that the impugned order has held them guilty merely on the basis of loose sheets said to have been recovered from their premises and without having any corroborative evidence to prove that they were guilty of the offence. He questioned whether the increase in production could be construed as enough evidence for proving clandestine removal on their part. It was contended that the loose sheets simply show the number of bags removed and no one talked about the contents of those bags. Further, there was no evidence in relation to use of the material, electricity and labour to indicate the scale of alleged production/removal held by the department. He further argued that the details of payments etc. in respect of the raw materials purchased by the appellants and also the finished goods sold by the appellants were simply not forthcoming in the investigation. Further, the loose sheets too only mentioned the movement of bags and did not disclose their contents particularly the alleged quantity of clearances. To support his contention he relied on the following decisions containing the propositions as indicated alongwith:
(i) Kashmir Vanaspati (P) Ltd. v. Collector of Central Excise : The note-book maintained by labourers containing authenticated entries and over writings to establish clandestine removal cannot be relied upon unless the same was supported by other evidence such as raw material consumed, goods actually manufactured and packed etc.
(ii) Gurpreet Rubber Industries v. Collector of Central Excise : The note-book maintained by a casual worker containing entries of production was not to be relied upon to establish clandestine removal unless supported by other evidence such as installed capacity of factory, raw material utilization, labour employed etc.
(iii) Prempreet Textile Industries Ltd. v. Commissioner of Central Excise, Surat-I : The charge of clandestine removal of yarn on the basis mainly of some entries in a private register was not sustainable.
(iv) Commissioner of Central Excise, Chandigarh v. Laxmi Engineering Works : Nothing on record shows any corroborative evidence in the form of receipt of raw materials or sale of final products to different buyers in a clandestine manner and that the department's case was based only on slips which did not contain names of customers or any other details regarding receipt or manufacture and clearance and hence charge was not proved.
(v) CCE Coimbatore v. Sasidhara Dyers 2003 (88) ECC 336(Tri.): To confirm the demands on clandestine removal, the department has to prove the production of goods in factory in terms of assessee having purchased the inputs. The department should also show that these goods were produced and sold to individuals in the market by collecting evidence of purchase of inputs and sale of final goods as well as of power consumption.
(vi) T.G.L. Poshak Corporation v. Commissioner of Central Excise, Hyderabad . The charge of clandestine removal based merely on note-books maintained by workers and other private accounts will not be sustainable unless supported by corroborative evidence with regard to purchase of raw material, manufacture of final goods, flow back of money or any seizure or statements from the purchasers.
8. The learned SDR reiterates the reasons and findings contained in impugned order. He also submitted that the sheets recovered by the visiting officers gave several clues and particulars such as the name of the goods "PANKING', the date of clearance, number of borries removed, the transportation details, timing etc. He also relied on the admission made by the accountant about the clandestine removal of such goods. He submitted that these goods were not entered in RG.1 register and even the reply of the appellants to the show cause notice in respect of para 12 thereof, did not dispute the same. It was also pointed out in his statement that actually at the time of visit of the officers 26 machines were running and that they had in all 40 pouch making machines in their premises and 18 to 20 workers were working in the factories. In this connection, he also referred to another statement of Mahesh Haryana, Accountant recorded on 8.5.2002. In this statement the said Accountant had disclosed the pattern of manufacture and clearances. According to him, the ratio of the total production of gutka ("PANKING") was 80% in respect of MRP 50 paise per pouch and 20% in respect of MRP Re.1 per pouch. The standard packing in respect of gutka ("PANKING") having MRP 50 paise was also explained in the statement. According to him, one plastic bag contained 55 packets and each packet contained 13 pouches and one bora contained in the plastic bags. It was also argued by the learned SDR that the department has never been arbitrary in working of the demand of duty, as they had based their calculations only in respect of 50 paise per pouch that is in a most reasonable and minimum level. The learned SDR referred to the provisions under Section 36A of the Central Excise Act, 1944 raising presumption as to documents in certain cases and submitted that similar presumption should be applied even to the proceedings under this Act. He relied upon the following decisions:
(i) Collector of Central Excise, Ahmedabad v. Vidya Wires (P) Ltd. 2002 (149) ELT 1448 (Tri.-Del ): Once Managing Director of the assessee firm admitted that 18 boxes of super enameled copper wire had been removed without payment of duty and some of the goods with the labels of the assessee's firm had been found in the premises of customer, preponderance of probability in regard to clandestine removal was in favour of department.
(ii) A.K. Engg. Co. v. Commissioner of Central Excise, Calcutta-I : The charge of clandestine removal is sustainable, when on interception of vehicle transporting goods without payment of duty, totality of evidence by way of statements both of proprietor and manager admitting to manufacture of goods without maintenance of account, removal thereof, including goods bearing brand names of others without payment of duty, and a private note book recovered pointing clearly to quantity of goods removed, with date of removal unmistakenly point to evasion of duty.
(iii) Commissioner of Central Excise, Madras v. Systems & Components Pvt. Ltd. : What is admitted need not be proved.
9. We have perused the case records and heard both sides at length. There is no denial of the fact that ample evidence exists to show the recovery of loose sheets from the premises of the appellants. Though the show cause notice and the order in original refer to them as loose sheets, we find that by referring to the dates and other details contained in them there is a clear continuity interlinking them in a cogent manner. They could have been detached from a note book or exercise book. The continuity is revealed by the running dates starting from 17.1.2002 and ending upto 18.2.2002. We also notice that the starting point in this investigation is the interception of a tempo carrying non-duty paid goods on 19.2.2002. This led to the discovery of the existence of two boras containing contraband and also the recovery of the so-called loose sheets about which the appellants have admitted as goods cleared. In one of the two statements made by the Accountant on 8.5.2002, there is a clear admission that the clearance has taken place in a clandestine manner. It has also been pleaded before us by the learned SDR that while calculating the duty liability, the department has not gone arbitrarily by the production capacity, but by the minute details as stood indicated in the recovered loose slips. Further, we find that the seizures made in transit as well as in the two godowns clearly corroborate with the findings of the impugned order relying on the recovered loose sheets. The statements of Director and Accountant and also the Production Supervisor all go to prove that the appellants were engaged in clandestine removal of excisable goods, as detailed in the loose sheets. Having admitted, saying that the details such as purchase of raw material, sale of finished products and payments thereof etc., were not investigated by the department appears to us as an argument for argument's sake. This argument does not make the case weak in any manner because it is settled position in law that the admitted fact need not be proved. Finding no infirmity in the impugned order, we are inclined to go by the reasoning and findings as contained in the impugned order. At this stage of dictation of the present order, the learned Counsel interprets and pleads for leniency in the penalty imposed by the authority below as he had invoked the provisions of Section 11AC and imposed a heavy penalty which is equivalent to the duty demanded. We, however, on considering the facts and circumstances of the matter find that there is no warrant for interfering with the impugned order in any way as the penalty imposed is commensurate to the nature of offence. Both the appeals are, therefore, dismissed.
(Dictated and pronounced in the open Court on 7.6.2006)