2002 (5) TMI 244 - Commission - Central Excise

Issues Involved:
1. Evasion of duty through the use of an undeclared stenter.
2. Seizure of private records indicating suppressed production and clearance.
3. Seizure of unaccounted stock of processed and semi-processed fabrics.
4. Seizure of kachcha delivery challans.
5. Jurisdiction of the Settlement Commission in cases of clandestine removal and non-declared goods.

Detailed Analysis:

1. Evasion of Duty Through the Use of an Undeclared Stenter:
M/s. J.I. Gandhi Silk Mills Pvt. Ltd., Surat was found to be using a third stenter with three chambers without declaring it to the Department. This undeclared use was part of the evidence gathered during the search of the factory premises on 30-3-1998.

2. Seizure of Private Records Indicating Suppressed Production and Clearance:
During the search, private note pads and books were seized, which contained details of the actual production and grey fabrics received for processing. Two specific books, 'Samrat Deluxe Duplicate Book' and 'Deep Jyot Duplicate and Triplicate,' revealed the suppression of production and clearance of processed fabrics during February and March 1998, amounting to 33,43,122.25 LM, involving a duty of Rs. 86,92,118/-.

3. Seizure of Unaccounted Stock of Processed and Semi-Processed Fabrics:
An unaccounted stock of 67,711.50 LM of fully processed fabrics worth Rs. 10,09,679/- was found and seized. Additionally, 4505 pieces of grey/semi-processed fabrics worth Rs. 54,87,090/- were also seized without lot numbers.

4. Seizure of Kachcha Delivery Challans:
Seventy-six kachcha delivery challans detailing processed fabrics were seized from the residential premises of an employee, Shri Arvind Modi. These challans matched the records seized at the factory, indicating that the processed fabrics were cleared without payment of duty.

5. Jurisdiction of the Settlement Commission in Cases of Clandestine Removal and Non-Declared Goods:
The applicant's advocate requested an adjournment, citing judgments from the Madras High Court and a pending writ petition in the Bombay High Court, which questioned the Settlement Commission's jurisdiction in cases involving non-declared goods. The advocate argued that the provisions of Section 32D(1) of the Central Excise Act, 1944 are similar to Section 127B of the Customs Act, 1962, and thus the Commission might lack jurisdiction over clandestine removals.

Commission's Decision:
The Commission noted that once an application is admitted under Section 32E, the Settlement Commission has exclusive jurisdiction over the case until an order is passed under Section 32F(7). The objective of the Settlement Commission is to expedite revenue realization and reduce litigation. The Commission referred to the Supreme Court's observation in the case of Commissioner of Income-Tax, Madras v. Express Newspapers Ltd., emphasizing the need for the Commission to decide cases in the interest of revenue and justice.

The Commission found the applicant's request for indefinite adjournment based on pending High Court cases to be an act of non-cooperation. The Commission decided that allowing such adjournments would prolong litigation rather than resolve it. Consequently, the Commission sent the case back to the proper officer under Section 32L, directing that it be disposed of as if no application was filed before the Commission.

Conclusion:
The Commission concluded that the applicant's actions constituted non-cooperation, and the interest of revenue would be jeopardized if the application were not disposed of. Therefore, the case was returned to the proper officer for disposal according to the law.

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