1997 (8) TMI 155 - AT - Central Excise

Issues Involved:
1. Jurisdiction of the Director of Anti Evasion (DAE) to issue the Show Cause Notice (SCN).
2. Jurisdiction of the Director General of Anti Evasion (DGAE) to adjudicate the matter.
3. Territorial jurisdiction of the Director of Anti Evasion.
4. Allegations of clandestine removal of goods and non-payment of excise duty.
5. Validity of affidavits submitted by the appellants.
6. Non-accountal of lenses in the manufacturing process.
7. Imposition of personal penalty on the proprietor of the appellant firm.

Detailed Analysis:

1. Jurisdiction of the Director of Anti Evasion (DAE) to issue the Show Cause Notice (SCN):
The appellants argued that the SCN issued by the DAE was invalid as the DAE was not a competent officer to issue such notice at the relevant time. They relied on the Tribunal decision in Malhoo Miyan Yakub Miyan v. Collector of Central Excise, which held that officers of DRI did not have jurisdiction to issue SCNs until Notification No. 215/86-C.E. was issued. However, the Tribunal found that Notification No. 191/84, dated 6-8-1984, specifically invested the DAE with the powers of the Collector of Central Excise, making the SCN issued on 10-8-1984 valid. The appellants' objections on the competence of the DAE were therefore rejected.

2. Jurisdiction of the Director General of Anti Evasion (DGAE) to adjudicate the matter:
The Tribunal noted that under Section 33, the Collector of Central Excise is the competent authority to adjudicate such matters. Since the DAE, later re-designated as DGAE, was invested with the powers of the Collector of Central Excise by Notification No. 191/84, the DGAE had the jurisdiction to adjudicate the matter. The Tribunal found no merit in the appellants' contention on this point.

3. Territorial jurisdiction of the Director of Anti Evasion:
The appellants argued that the DAE did not have territorial jurisdiction equivalent to a Collector of Central Excise, who has jurisdiction within a State or specified area. The Tribunal clarified that under Section 2(b) of the Act and Rule 4 of the Rules, the CBEC has wide and unfettered powers to appoint any person as a Central Excise Officer and confer any powers on them. The Notification No. 274/79 appointed various officers of DRI, including DAE, with the powers of corresponding officers of Central Excise. The Tribunal rejected the argument that the DAE's territorial jurisdiction was not specified, noting that the jurisdiction would be co-extensive with the corresponding Central Excise officers.

4. Allegations of clandestine removal of goods and non-payment of excise duty:
The appellants contended that the charge of clandestine removal of 2174 photocopier machines without payment of excise duty was not established. They argued that the amounts deposited in banks were not solely from the sale of machines but also included proceeds from spares, services, installation, and repair charges. The Tribunal upheld the findings of the adjudicating officer, who concluded that the deposits represented the sale value of machines based on the material available and the appellants' admission. The Tribunal found no reason to interfere with the impugned order on this point.

5. Validity of affidavits submitted by the appellants:
The appellants claimed that affidavits sworn by brokers and submitted to the Income Tax Department should have been considered in the adjudication proceedings. The adjudicating officer rejected this argument, noting that no such affidavits were produced before him. The Tribunal found no reason to disagree with the adjudicating officer's findings on this point.

6. Non-accountal of lenses in the manufacturing process:
The adjudicating officer examined the evidence and concluded that the appellants' claim of purchasing machines and lenses from middle-men and small manufacturers was an afterthought, as they could not provide names and addresses of such manufacturers. The Tribunal upheld the adjudicating officer's findings that the photocopying machines became fully manufactured commodities only after testing and adjustment in the appellants' premises. The duty demand of Rs. 95,17,592.48 was confirmed.

7. Imposition of personal penalty on the proprietor of the appellant firm:
The Tribunal found the additional personal penalty of Rs. 50,000/- on the proprietor of the appellant firm, a proprietary concern, to be legally impermissible. The impugned order was confirmed with the modification that the personal penalty on the proprietor was dropped.

Conclusion:
The Tribunal upheld the impugned order dated 31-7-1989 passed by the Director General of Anti Evasion, subject to the modification that the personal penalty on the proprietor was dropped. Both appeals were disposed of accordingly.

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