1980 (11) TMI 45 - HC - Central Excise

Removal of goods without entries in records amounts to no statement - Excess removal - Mis-statement - Speaking Orders and Natural Justice

Issues Involved:
1. Demand of excise duty and penalty.
2. Jurisdiction and limitation of the show cause notice.
3. Applicability of Rule 10 of the Central Excise Rules.
4. Onus of proof regarding excess removal of goods.
5. Adequacy of evidence and findings by the authorities.
6. Nature of orders by the Central Board of Excise & Customs and the Central Government.

Detailed Analysis:

1. Demand of Excise Duty and Penalty:
The writ petition challenges the demand of excise duty amounting to Rs. 27,040.74 on goods alleged to have been removed without obtaining the gate pass, along with a penalty of Rs. 2,000. The petitioner, a manufacturer of various boards, was found by the Central Excise officers to have removed 27,614.500 Kgs of goods without proper documentation from 1st January 1962 to 24th December 1965. The show cause notice issued on 28th May 1966 demanded duty of Rs. 1,11,161.56 and a penalty under Rules 9, 52A, and 226 of the Central Excise Rules.

2. Jurisdiction and Limitation of the Show Cause Notice:
The petitioner argued that the show cause notice was issued beyond the time limit prescribed by Rule 10 of the Central Excise Rules and was beyond the scope of Rule 10A. The petitioner denied any excess manufacture or removal but admitted discrepancies between statutory records and sale records due to various factors, including different weighment practices and market conditions.

3. Applicability of Rule 10 of the Central Excise Rules:
The petitioner contended that Rule 10, which deals with recovery of duties short-levied, was applicable and the notice was time-barred. However, the court held that Rule 10 was not applicable as it pertains to cases where there is a mis-statement regarding the quantity, description, or value of goods. Since the goods were removed without any gate pass or recording in excise records, Rule 9(2) and Rule 10A were deemed applicable. The court emphasized that Rule 9(2) would apply in every case of removal without proper documentation, and Rule 10 requires an assessment under Rule 52, which did not occur here.

4. Onus of Proof Regarding Excess Removal of Goods:
The petitioner argued that the onus was on the Department to prove excess removal, which was not discharged. The court found that the initial onus was met by the respondents through evidence of discrepancies in sales and quantity removed. The petitioner's explanations for the discrepancies were not accepted by the Collector of Central Excise, whose findings were upheld on appeal and revision.

5. Adequacy of Evidence and Findings by the Authorities:
The petitioner claimed that its evidence was rejected on flimsy grounds. The court held that the adequacy of material used by the authorities to reach their findings could not be questioned under Article 226 of the Constitution. The Collector's detailed examination of the petitioner's explanations was deemed sufficient, and the court refused to delve into disputed facts.

6. Nature of Orders by the Central Board of Excise & Customs and the Central Government:
The petitioner argued that the orders by the Central Board of Excise & Customs and the Central Government were non-speaking and should be quashed. The court disagreed, noting that the Collector provided detailed reasons, and the Board's order, though brief, contained sufficient reasoning. The Central Government's agreement with the Board's findings was considered adequate, and the court found no violation of natural justice principles.

Conclusion:
The writ petition was dismissed with costs, affirming the demand of excise duty and penalty. The court upheld the findings of the excise authorities and the subsequent orders of the appellate and revisional authorities, concluding that the petitioner's contentions lacked merit.

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