Customs, Excise and Gold Tribunal - Delhi
M/S. Parshuram Cement Ltd., Shri B.K. ... vs Cce, Lucknow on 13 June, 2001
ORDER
P.S. Bajaj
1. These three appeals have been preferred by the appellants against the common order in original dated 28.2.2000 passed by the Commissioner vide which he had confirmed duty demand of Rs.33,27,909.20 alongwith penalty of equal amount under Section 11-AC and of Rs.2 lakhs under Rule 173-Q of the Central Excise Rules, on appellant no.1 and imposed penalty of Rs.1 lakh each on other two appellants.
2. The facts giving rise to these appeals may briefly be stated as under:
3. Appellant no.1 company was engaged in the manufacture of ordinary portland cement while appellants nos.2 and 3 were working at the relevant time as its managing Director and General Manager respectively. On 8.12.95 the factory premises of the company were visited by the Preventive Staff of the Central Excise Division, Aligarh and one Shri D. Gupta who introduced himself as production incharge was present. On conducting search of the store-room empty bag register containing entries for the period 1.4.95 to 22.7.95 and note-book (marked as store) carrying entries for the period 4.12.95 to 7.12.95 were recovered. These documents were resumed and on scrutiny of the entries made therein vis-a-vis their comparison with the RG.1, it revealed that the figures recorded in the assumed documents did not tally with the figure of production and clearances mentioned in the RG.1. It appeared that only part of production was being recorded by the appellants in the Rg.1 while the rest was being regularly suppressed with intent to evade the duty. The statement of Shri B.K.Sood (appellant no.3) who was working as General Manager at that time, was also recorded on 11.12.95 regarding the recovery of the seized documents. The statement of Subhash, Store Keeper was also recorded on 15.1.96. On completion of the enquiry, show cause notice dated 13.8.98 was served on all the appellants vide which duty demand of Rs.33,27,909.20 was raised and penalty was also proposed to be imposed on them. The appellants contested the correctness of the show cause notice by denying that the recovered documents belonged to them. They also requested for cross-examination of the witnesses whose statements were recorded at their back during investigation. They denied evasion of the duty by resorting to clandestine production and removal of the goods. The imposition of penalty under Section 11-AC was also disputed by them on the ground that the alleged evasion of duty pertained to the period to 28.9.96, the date on which the said section was introduced in the Act. They also avered that the demand was time barred and extended period of limitation could not be invoked as they had been filing RT.12 Returns every month regularly and that their records were also regularly audited and no objection at any time raised by the Excise Department.
4. The Commissioner, however, did not accept the version of the appellants and passed the impugned order confirming duty and imposing penalties on them, as detailed above.
5. The learned counsel has assailed the validity of the impugned order of the Commissioner by contenting that the empty bag register and the note book allegedly recovered from the stone of the appellants could not be legally used as an evidence against them for computing their production and evasion of the duty amount as their authenticity was never accepted by them and the entries therein also remained uncorroborated on the record. The electricity consumption also could not be made basis for presuming the clandestine production and removal of the goods by the appellants during the period in question, under the law, for want of corroboration from any other material. The statements of witnesses also could not be used against the appellants as they were never submitted for cross-examination by the appellants inspite of their request. Therefore, the impugned order deserves to be set aside.
6. On the other hand, the learned SDR has only reiterated the correctness of the impugned order of the Commissioner.
7. We have heard both the sides and gone through the record.
8. The duty demand from the appellants had been principally raised on the strength of two documents i.e. empty bag register and note-book allegedly recovered from their store room and the electricity consumption, as well as statements of Subhash, Store-keeper and appellants nos.2 and 3. The empty bag register allegedly contained entries for the period 1.4.95 to 22.7.95 regarding the empty bags consumption but this register had been disowned by the appellants. Neither appellant no.2 nor appellant no.3 in their respective statements recorded during investigation had accepted he correctness/authenticity of this document and the entries made therein as is evident from the perusal of their respective statements. Even Subhash, Store Keeper in hiss statement did not concede that entries in the empty bag register were made by him and the same were correct, Otherwise also the statement of this witness could not be attached any legal value as he was never submitted for cross-examination inspite of the request by the appellants. His statement was recorded at their back and the appellants were entitled to seek his cross-examination for testing his veracity. Even statement of Shri B.K. Sood, appellant could not be made use of as his cross-examination by the appellants, was disallowed without any sufficient cause by the Commissioner. No material on the record has been brought to our notice by the SDR to corroborate the correctness and authenticity of the entries made in the empty bag register. Therefore, on the basis of unproved/unauthenticated entries in the register regarding receipt and consumption of the empty bags no inference could be drawn that there was clandestine production and removal of the goods during the period 1.4.95 to 22.7.95.
9. Similarly, on the basis of the electricity consumption during the period in question as given in the show cause, no lawful conclusion could be arrived at there was excess production and clandestine removal, of the goods by the appellants for want of corroboration from any other source. There is nothing on the record to suggest if any excess raw material or finished goods were found in the store at the time of checking. There is also no evidence on the record to suggest the clandestine receipt of the raw material from various buyers and sale of the finished goods to different persons during the period in dispute by the appellants. No discrepancy in the RT.12 Returns which were regularly filed by the appellants was detected by the Excise Department at the time of checking. No seizure of the finished goods supplied to any customers in a clandestine manner, without payment of duty took place. No statement of any buyer of having received the goods from the appellants in a clandestine manner was recorded during investigation. While auditing the record of the appellants on different occasions by the Excise Department no discrepancy was found in the stock of raw material and the finished goods. In the absence of all these circumstances, it could not be concluded simply on the basis of the consumption of the electricity that there had been clandestine manufacture and removal of the goods by the appellants during the period in question (August 1993 to December 1995).
10. In Padmanabh Dyeing & Finishing Work Vs. CCE Vadodara, 1997(90) ELT 343 it has been observed by the Tribunal that in the absence of direct evidence regarding removal of the goods without payment of duty, electricity consumption was not enough to work out the production power of the assessee. To the same effect is the ratio of the law laid down in Hans Castings Pvt. Ltd. Vs. CCE Kanpur, 1998(102) 139 by the Tribunal it is well settled that suspicion, however, grave cannot take place of legal proof. It was fr the Revenue to establish that there was excess production than the one entered in the statutory record and removal of the same in a clandestine manner without payment of the duty by the appellants during the period in dispute but the material/evidence brought on record was insufficient to prove the same.
11. However, the removal of the finished goods without payment of duty during the period 4.12.95 to 7.12.95 by the appellants stands proved from the entries in the note book recovered from their premises. The correctness of the entries in the note book had not been disputed by the counsel for the appellants before us. Therefore the allegations made in the show cause notice (refer page 3) that recorded production in the RG.1 was 2855 bags of 50 Kg. each while as per entries in the note book was of 3857 bags and there was difference of 1002 bags have to be accepted to be true. The duty payable on the suppressed 1002 bags @ 200 PMT, comes to Rs.10,020/- as per calculations of the appellants submitted before us, during the course of arguments. However, this duty amount can be verified by the department. The appellants must be, therefore, held to be liable to pay duty on 1002 bags amounting to Rs.10,020/- or any other amount found on verification.
12. However, no penalty under Section 11-AC of the Act could be legally imposed as period of evasion of duty, for which the show cause notice dated 13.8.98 was issued, involved was August 1993 to December 1995 whereas this section admittedly was not on the statute during that period, as the same was introduced in September 1996.
13. The imposition of penalty under Rule 173-Q of the Rules on the company in view of the facts and circumstances and the period of duty liability proved to be of only four days (4.12.95 to 7.12.95), does not stand justified and as such the same is set aside.
14. Similarly, there is no material on the record to justify the imposition of penalty under rule 209-A of the Rules, on appellants nos.2 and 3. They were employees of the company appellant no.1 at that time and there is evidence to attribute to them commission or omission of any act which resulted in evasion of duty by the company. Therefore, the same is set aside.
15. In view of the discussion made above, the impugned order against appellants nos.2 and 3 is set aside and their appeals E/2702/2000-NB and E/2703/2000-NB stand accepted. However, impugned order against the company, appellant no.1 is modified. The duty demand against the company is confirmed only for the period 4.12.95 to 7.12.95 while for the rest of the period is set aside. The penalty imposed under Section 11-AC of the Act as well as under rule 173-Q of the Rules on the company is also set aside. The appeal No.E/2701/2000-NB of the company, appellant no.1 stands accordingly partly allowed with consequential relief, if any, permissible under the law.