2017 (2) TMI 620 - HC - Central Excise

Condonation of delay - Clandestine removal - production and clearance of branded Chewing Tobacco under the guise of unbranded Chewing Tobacco - Held that - there is a non-maintenance of the accounts in respect of certain quantity of the raw materials, finished product and non-finished product for which assessments were made and also that has been recovered and private accounts is maintained instead of maintaining regular accounts. So only on technicality, the assessee is fighting the matter. The issue is a long drawn one. It is pending for more than 15 years. In the event of remand, it has to go once again before the assessing officer or before the Commissioner (Appeals) which would not serve any useful purpose, rather, it is seen that statement from the accountant is also said to have been recorded, and also there is a clear admission on the part of the assessee with regard to manufacturing of tobacco related goods without declaring to the Department which attracts duty under the Central Excise Rules. There is no bona fide on the part of the assessee in seeking to condonation of delay and it is only with the defiant intention to delay the process of recovery - Review Application dismissed - decided against applicant.

Issues Involved:
1. Alleged suppression of production and clearance of branded Chewing Tobacco under the guise of unbranded Chewing Tobacco.
2. Non-maintenance of statutory accounts and reliance on private accounts.
3. Delay in filing appeals and applications for condonation of delay.
4. Application of Section 14 of the Limitation Act.
5. Supply of necessary documents to the assessee.
6. Conduct of the assessee in the litigation process.

Issue-wise Detailed Analysis:

1. Alleged Suppression of Production and Clearance of Branded Chewing Tobacco:
The primary issue revolves around the production and clearance of branded Chewing Tobacco under the guise of unbranded Chewing Tobacco. Based on intelligence reports and subsequent inspections, it was found that the assessees had suppressed the production of Chewing Tobacco, which falls under overhead No.2404.41 41, and illicitly removed the same without paying the duty. The inspection revealed that the finished stock of Chewing Tobacco was 193 kgs, and there were no statutory accounts available. The accountant's interrogation and recovery of private accounts further substantiated the illicit activities.

2. Non-maintenance of Statutory Accounts and Reliance on Private Accounts:
The assessment officer found that the assessees did not maintain statutory accounts and relied on private accounts. This led to the Additional Commissioner calling upon the assessees to pay the duty and imposing penalties. The de novo order confirmed the non-maintenance of accounts for certain quantities of raw materials and finished products, which led to assessments and penalties.

3. Delay in Filing Appeals and Applications for Condonation of Delay:
The assessees faced issues with delays in filing appeals and sought condonation of the delay. The Commissioner (Appeals) dismissed the appeals as time-barred, and the Tribunal upheld this decision. The assessees argued that the provisions under Section 14 of the Limitation Act should be interpreted liberally to condone the delay, citing the Supreme Court's decision in M.P. Steel Corporation v. Commissioner of Central Excise.

4. Application of Section 14 of the Limitation Act:
The assessees contended that Section 14 of the Limitation Act should apply as they were prosecuting with due diligence another civil proceeding before the appellate authority. They argued that the word "court" in Section 14 includes tribunals, and the appeal was filed within the stipulated time. However, the court found that the conduct of the assessees in dragging the matter from 2001 to 2013 indicated a casual approach, and the documents were supplied as required.

5. Supply of Necessary Documents to the Assessee:
The assessees claimed that necessary documents were not supplied, which affected their case. However, the Department contended that all required documents were provided, and the de novo order recorded the list of documents furnished to the assessees. The court noted that the documents not supplied were not relied upon adversely in the adjudication process.

6. Conduct of the Assessee in the Litigation Process:
The court observed that the assessees adopted a casual approach and dragged the matter for over 15 years. The conduct included non-maintenance of accounts and reliance on private accounts. The court found that the show cause notice was issued, documents were supplied, and the order was passed following the principles of natural justice. The court did not find any merit in the assessees' arguments and upheld the penalties imposed.

Conclusion:
The civil miscellaneous appeals and review applications were dismissed. The court found no reason to interfere with the Division Bench's order, which had observed the lack of bona fide on the part of the assessees in seeking condonation of delay. The cost of ?50,000 imposed in the revision petitions was waived. The judgment emphasized the importance of maintaining statutory accounts and the consequences of non-compliance with excise duty regulations.

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