Customs, Excise and Gold Tribunal - Delhi
Kalvert Foods India Pvt. Ltd. vs Commissioner Of C. Ex. on 2 August, 2002
Equivalent citations: 2002(84)ECC366, 2003(152)ELT131(TRI-DEL)
ORDER P.S. Bajaj, Member (J)
1. The above captioned appeals have been preferred against the common order-in-original, dated 27-2-2002 vide which the Commissioner of Central Excise has confirmed the duty and imposed penalties on the appellants as detailed in the order itself.
2. The appellant No. 1, M/s. Kalvert Foods India Pvt. Ltd. is a company (in short hereinafter referred to as 'Company') engaged in the manufacture of P & P Food Products, such as, assorted jams, pickles, squashes, cooking sauces, chutneys, syrups, synthetic vinegars etc. The company is also trading in sugar, salt and pepper by packing into small packs. The appellant No. 2, Shri Yunus A. Kalvert is the Managing Director of the Company. The Revenue authorities visited the factory premises of the company on 22-11-2000. One tempo was standing there loaded with the goods and the same was seized. The goods found lying excess in the stock than what were entered into RG-I register, valued at Rs. 7,33,668/- were also seized. Thereafter, search was also carried out at the premises of the dealers/traders, to whom the company allegedly supplied the finished goods. The goods found lying in those premises of the value of Rs. 6,22,946/- were also seized on the belief that they were not duty paid. Similarly, the search was carried out by the Officers on 28-11-2000, at the premises of M/s. Relish Trading Company (in short 'RTC')/ the selling agent of the appellant-company and M/s. Sai Krupa, and record pertaining to the sale and purchase of the goods, lying in the offices of these companies, were seized. It revealed to the officers that, in fact, the appellant-company had cleared jams, syrup, sauces, pickles, etc., from the factory premises without payment of duty to the above said selling agents without payment of duty, but had shown those clearances as that of the sugar, in the invoices and had also cleared the branded goods to the dealers/traders.
3. On completion of the investigation, show cause notice was issued to the company, appellant No. 1 and its Director, appellants No. 2. The notice was also issued to appellants No. 3, Ms. Vinita M. Khanolkar, Proprietor of M/s. RTC and Partner of firm, M/s. Sai Krupa Corporation, vide which duty demand was raised from the company and penalty was also proposed to be imposed on the company. The penalty was also proposed on the other appellants under Rule 209A of the Rules.
4. The appellants contested the correctness of the show cause notice. The company denied any clandestine removal of the excisable goods to any of the dealers or the selling agent. The company also denied of having cleared the excisable goods without payment of duty in the guise of sugar, salt and pepper, to the selling agent, M/s. RTC. The Commissioner who adjudicated the show cause notice, however, confirmed the duty demand and ordered the confiscation of the seized goods, imposed penalty equivalent to the amount of duty on the company, appellants no. 1, and also imposed penalty on the other two appellants, as detailed in the impugned order itself.
5. The learned Counsel for the appellants has contended that there is no tangible, reliable and cogent evidence to substantiate the allegations of clandestine removal of the goods without payment of duty by the appellant-company. The confiscation of the seized goods had also been made illegally for want of any evidence to prove any intention on the part of the company to remove the same without payment of duty in a clandestine manner. No branded goods were also cleared by the company as alleged in the show cause notice and observed by the Commissioner in the impugned order. The impugned order has been passed on the surmises and conjuctures. No dealer/trader or selling agent of the company had admitted the receipt of the goods without the cover invoices and as such the goods lying with them could not be legally ordered to be confiscated. The impugned order deserves to be set aside.
5. On the other hand, the learned JDR, has reiterated the correctness of the impugned order.
6. We have heard both sides and gone through the facts on record. The appellant-company admittedly is engaged in the manufacture of various types of P & P Food Products. The company is manufacturing excisable products, such as, jam, pickle, syrups, etc., and also trading in salt, sugar and pepper. For trading activity, the company had even filed a declaration under Rule 173B of the Rules. The tempo bearing no. MH-04-S-148 loaded with the goods was seized by the Excise Officers at the time of visit to the factory of the company when it was standing in the factory premises itself. The relevant documents in respect of these goods were produced at the spot by the representative of the company and this fact even finds mentioned in the show cause notice itself. Therefore, neither the tempo nor he goods loaded therein could be legally seized and confiscated when the relevant documents were shown to the officers at the spot. It could not be said that an attempt was being made to clear those goods in tempo in a clandestine manner, when the company's representative produced the invoices and other relevant documents in respect thereof. The Commissioner has thus wrongly ordered the confiscation of those goods and the tempo. Therefore, his order in this regard cannot be sustained and is set aside.
7. Similarly, the confiscation of the goods valued at Rs. 7,33,668/- as ordered by the learned Commissioner in the impugned Order could not be made on the ground that those were not entered in the RG-I Register as at the spot the Director of the company clarified that all those goods were duly entered in the production slips from where the entries in the RG-I register were to be carried out. Moreover, the goods were released to the company during the investigation and the company had cleared the same on payment of duty. In the case of Bhillai Conductors Pvt. Ltd. v. CCE, 2000 (125) E.L.T. 781, it has been observed by the Tribunal that goods lying in the factory cannot be confiscated under Rule 173Q of the Rules. Therefore, the impugned order of the Commissioner in this regard also deserves to be set aside.
8. Regarding the alleged clandestine removal of the goods by the company, appellant No. 1, to its various dealers/traders and the selling agent, as detailed in the show cause notice, there is not reliable evidence whatsoever to establish the same. None of the dealers/traders in his statement had admitted of having received the goods at any time from the company without the cover of the invoice. The company even submitted the affidavits of the dealers from Ratnagiri, Chiplun, Khed, wherein they had corroborated the stand of the company of having not received the goods without the invoice in a clandestine manner. They had given the details of the purchases made by them through various bills/invoices from the company. The fact that they could not correlate the duty element with the goods found lying with them in their premises, could not be made basis for raising inference that those goods were received by them without payment of duty, from the company. The Revenue officials did not reconcile the stock found lying with the dealers/traders and the selling agents with the record of the company, appellants No. 1 to ascertain if any goods had been not accounted for in the record of the company and had been cleared without payment of duty. No evidence had been also collected to, prima facie, show the excess receipt of raw material, excess consumption of electricity by the company for manufacturing the extra goods than what were recorded in the record. Therefore, the goods found lying in the stock of the dealers/traders and selling agents could not be legally confiscated without getting clear proof of the sale of the same to them by the company without payment of duty. The company had furnished the details of the goods cleared to the dealers during the period 1996-97 to November, 2000, which are at pages 355-370 of the paper book and without questioning the correctness of those details, and verifying the duty paid character of the goods, confiscation of the same could not be made. No presumption about the clandestine sale of those goods to the dealers, by the company could be legally raised.
9. In the show cause notice, it was no doubt alleged that the appel-
lant-company had cleared jams, syrups, sauces, pickles, etc., without payment of duty under the guise of sugar, salt and pepper, the non-excisable goods, to its selling agent, M/s. RTC. But appellant No. 3, who is the proprietor of the company, M/s, RTC and also Partner of M/s. Sai Krupa Corporation, has denied this fact in her statement. She rather stated that the goods had always been received by her under the cover of invoice and those very invoices were forwarded to the dealers/traders, while selling the goods to them. The purchase of excess raw material for manufacture of the goods allegedly sold in the guise of sugar, salt, etc., by the appellant-company to M/s. RTC, had also been not proved on the record. The fact that M/s. RTC raised invoices of almost equal amount for sale of dutiable goods, such as syrups, vinegar, jams, sauces, etc., for which the appellant-company cleared the sugar, salt etc. to them, was not enough to raise an inference that sugar and salt was never sold to them by the appellant-company. The company had produced record regarding the sale of sugar, salt and pepper, etc., to M/s. RTC and the latter (M/s. RTC) had even shown the purchase of the same in their books of account. During the period when the sale of sugar, salt, etc., was made to M/s. RTC, the appellant-company also cleared the dutiable goods, such as, vinegar, jams, sauces, etc., under statutory invoices to that company and all that was reflected in the stock register of the company. The appellant-company even reflected the sale of those goods in their RT-12 returns. The copy of the entries made in the stock register had been placed on record by the company wherein all the details of the dutiable goods cleared by the company to M/s. RTC had been recorded. Merely because the sale value in the invoices of salt and sugar issued by the appellant-company tallied with the sale value recorded in the invoices of excisable goods issued by M/s. RTC, to the customers, no such inference that the appellant-company, cleared excisable goods, such as, vinegar, jams, sauces etc. instead of salt, sugar, etc., to that company, could be raised.
10. It is well settled that the charge of clandestine removal/ manufacture of the goods by the assessee has to be established by the Department by producing cogent, convincing and tangible evidence and such a charge cannot be based on assumptions and presumptions. In this context, reference may be made to - (i) TCL Poshak Corporation v. CCE, 2002 (140) E.L.T. 187; (ii) MM Dyeing & finishing, 2002 (139) E.L.T. 143; (iii) K. Raja Gopal v. CCE, 2002 (142) E.L.T. 128; (iv) Prince Ghutka Ltd. v. CCE, 2002 (141) E.L.T. 148; and Indra Metal Works v. CCE, 1999 (108) E.L.T. 745, wherein such a ratio of the law has been laid down.
11. Besides this, the plea of the appellants that they never cleared the goods in question under any brand name and being unbranded were chargeable to NIL rate of duty, also deserves to be accepted. There is no reliable evidence on the record to prove that any brand name had been put on the containers containing jam, pickle, syrups, etc., cleared by the appellants company, to its distributors/traders and selling agent. The company has only mentioned its full name, M/s. Kalvert Foods India Pvt. Ltd. on the containers. The company had never promoted any brand name by the name 'KALVERT' on any of the products in dispute in the present case. They had even produced search report received by them from the Trade Mark and Patent Company to show that the brand name 'KALVERT' did not even stand registered in their name. The Company, in terms of Clause 8(i)(b) of the Food Products Order, 1995, had displayed its complete name on the goods manufactured and cleared by them in the market. That name could only be termed as 'HOUSE MARK' and not trade name. The observation of the learned Commissioner that 'HOUSE MARK' is only relevant for pharmaceutical industry and not for others, in our view, is wholly misconceived in view of the ratio of the law laid down by the Tribunal in (i) Rajdoot Paints Berger Paints v. CCE, 2001 (134) E.L.T. 281; and (ii) Deebha Foundary v. CCE, 2001 (137) E.L.T. 1180. Even the Board has also cleared this position vide Circular dated 18-1-2000.
12. In view of the discussion made above, the impugned order of the Commissioner cannot be sustained and is ordered to be set aside in toto. As a result, all the appeals of the appellants stand allowed with consequential relief, if any, permissible under the law.