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1. In this matter the allegations are that when the Central Excise Officers visited the factory of the appellants by surprise on 21.5.80; they found as follows :

(a)    RG-1  Register was written only upto 18.4.80;
 

(b)    gate-passes were written upto 17.5.80;
 

(c)    there   were   63   fully   packed   wooden   boxes   containing   69,709   Hacksaw Blades and another 19100 pieces of Hacksaw Blades in cardboard packing which   were   ready   for   despatch.   In   respect   of   these,   the   appellants would  not  produce   any  registers or other documents which  could show accountal and manufacture;
 

(d)    there   were   3,578  pieces  of  Hacksaw  Blades  in  excess  in  the  bonded store-room which were not accounted for;
 

(e)    there were shortages of 1,152 pieces of hacksaw blades;
 

(f)    the   Central   Excise   officers   also   visited   the   Branch   Office   of   M/s. Technis Industries in Raniganj, Secunderabad  on  21.5.80 who were allegedly   dealing   in   Hacksaw   Blades   manufactured   by   the      appellants, M/s.   Indo-Hacks   Ltd.   In   these   premises,   they   found   4,331   pieces   of Hacksaw   Blades   which   according   to   the   statement   of   one   Shri   C.K. Murthy,   representative   of  the   Branch   Office   were   actually   supplied by   M/s.   Indo-Hacks  Ltd.  without  any  documents  showing   the  payment of Central Excise duty.
 

(g) as per the invoices, delivery challans and lorry receipts, the total value of clearances of M/s. Indo-Hacks Ltd. during year 78-79 worked out to Rs. 5,36,648.39. The appellants failed to pay Central Excise duty on clearances above Rs. 5 lakhs as required;

(h) during the year 1979-80, the appellants were found to have removed goods for a value of Rs. 36,44,676.60 without accounting for the production and clearances and without payment of duty;

6. It is also stated by the appellants that, as stated by them while dealing with some of the entries in the statements accompanying the show cause notice, the fictitious entries were created with a view to creating necessary evidence for obtaining larger finances from the Banking Institutions.

7. On behalf of the respondent Shri N.I. Ramanathan states that M/s. Indo Hacks Ltd. have not been able to establish that the relevant entries in their records regarding the production and despatch of excisable goods were fictitious. The department was able to seize not only accounts of such goods but also delivery challans and other documents including lorry receipts, apart from invoices. The Collector had rightly rejected the contention that the invoiced sales were non-existent. It is also not possible for the department now to accept that the value of the total goods despatched by Indo Hacks was not Rs. 5,36,648.39 but only Rs. 3,73,521.29 on the grounds that the value of the goods as invoiced had subsequently to be reduced because the dealers found that the products were of an inferior quqlity, and difficult to sell at invoiced rates. The Collector rightly rejected this contention in view of the fact that the declared turnover to the sales-tax authorities also was of the order of Rs. 5,34,756.20. Besides he has taken the view that once the goods are assessed to duty and cleared, any subsequent reduction of prices is not of concern to Central Excise. Dealing with the arguments that the goods supplied to Technis Industries were Blanks and not hacksaw blades, it was pointed out that the appellants have not furnished any evidence in support of this claim. On the other hand, it is seen that Technis Industries had indented for high speed hacksaw blades and not blanks. Similarly, the invoices and the lorry receipts describe the goods as hacksaw blades. It is also pointed out that besides the documents like invoices, communication memos etc. the Central Excise officers made a seizure of hacksaw blades at Technis Industries. The Collector has also not accepted that despatches to the Madras Branch notionally were of the order of Rs. 5,45,022.40 as against the figure of Rs. 15,72,909.06 contained in the show cause notice. In view of the fact that not only delivery challans have been found for these despatches but in two cases the department was also able to recover copies of lorry receipts. On the same ground he has rejected the claim that the sale amounting to Rs. 56,050 to M/s. T.I. & M. Ltd., Madras were fictitious. He has not found this contention acceptable in view of the fact that the department has been able to lay hand on delivery challans and invoices and also the fact that M/s. T.I. & M. Ltd., Madras, were supplied with 3 samples of hacksaw blades on 12th September 1979. The Collector further rejected out of hand the contention that the value fo goods computed at Rs. 15,72,909.60 was boosted up value of goods actually valued at Rs. 81,366, for the reasons simply that Indo Hacks have not been able to substantiate this claim.

9. 92,387 hacksaw blades were actually seized in the factory and as the Collector has pointed out, it is indisputable that they were not accounted for in the factory's RG-1, which was also admitted by Indo Hacks. An attempt has been made by the factory to explain that the goods relate to two gate-passes bearing Nos. 51 and 52 both dated 17.5.1980 and it is explained that these goods could not be transported due to break-down of the truck. On the other hand the department has been able to collect evidence of the packing of goods two days before the visit of the Central Excise officers to the factory i.e. on 21st May, 1980. It is on this ground that the Collector has held that the goods were produced and packed after 17.5.80.