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TMI Blog1985 (10) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... 3F, 173G(1), 173G(2) read with Rules 52A and 173(G) of Central Excise Rules. It is alleged that this was detected when the factory premises and head office of M/s. Paints and Colour and the residence of the Proprietor of the Company were simultaneously searched by the Central Excise Officers on 22nd/23rd March, 1973. The Excise authorities also recovered certain documents, viz. cash/credit memos, challans, bills, etc. said to belong to (1) Northern Agency of Paschim Icchapur, Barasat (24 Parganas), (2) Eastern Traders of Begmari Road, Calcutta-54, (3) B.A. Trading of Madhab Sen Lane, Calcutta-7 and (4) Mohd. Hashem of 90, Mechua Bazar Street, Calcutta-7. On a scrutiny of these documents, it appeared that the above-mentioned firms were non-existent and that M/s. Paints and Colour had disposed of their own goods by using the names of the above firms, which were fictitious. While the sales of paints and varnishes appear to have been made in the names of B.A. Trading and Mohd. Hashem, such sales had been made in the name of Northern Agency and Eastern Traders by M/s. Paints and Colour. In the course of the search, certain private as well as statutory records, stated to belong to M/s. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , materials of any other things valued at Rs.25,000.00 used in connection with the manufacture, production, storage, removal or disposal of the excisable goods, giving the party an option to redeem the same on payment of a fine of Rs.10,000.00. In appeal, the Central Board of Excise and Customs upheld the order of the Collector, holding that the charges against the appellants were fairly established and that the demand of duty was also correct. The penalty was, however, reduced from Rs.25,000.00 to Rs.10,000.00, taking into consideration the financial position and smallness of the enterprise . The order regarding confiscation of the plant and machinery and the redemption fine fixed in lieu of confiscation was also set aside. 4. Now, before us, the appellants have pleaded in their written submissions that the bulk of the purchases were from M/s. Chemo Synthetics, M/s. Bose Co. and other open market parties to whom payments, it is claimed, were made by account payee cheques and under proper challans, bills, duty-paying documents, etc. It is stated that the purchases made from other parties were fully accounted for in the books of accounts of the appellants. M/s. Chemo Synthetics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r turned to bad debts. It is further stated that the show cause notice dated 2nd January, 1976, was served after about three years of the seizure and during the period from 12.1.1976 to 12.11.1976, when the appellants were given an opportunity to examine the records, they could examine only a few of them and further examination was refused on the plea that the appellants were unable to give reference to the serial number of the records which they wish to examine and that they were taking a long time in examination. They said that the Collector decided the matter without giving the appellants further opportunity to examine the records. It is pointed out that the Collector himself had admitted in his order-in-original that considering the volumes of records that had to be examined by the department and the lengthy statements required to be compiled, the possibilities of mistakes could not be ruled out. It is said that the findings of the Collector that ample opportunity had been given to the appellants to examine the case records and also to appear for personal hearing and that of the Board that there was no reason to remand the case of the Collector for de novo proceedings were unju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods sold under the bills, challans, slips and statutory nil duty paying documents of other parties had actually been removed from the appellants factory. It is further stated that from the fact that some of the other parties had used brand names of the appellants, it is not established that the goods were manufactured or removed from the appellants factory. It is stated that the Appellate authorities erred in law and facts in holding that M/s. Bose Co. v. M/s. Eastern Traders and M/s. Northern Agency were fictitious firms. 5. Now in the roral submissions before us, Shri R.M. Das, teamed Consultant for the appellants, has made the point that the demand of duty on him is barred by limitation. From the department side, Shri B.R. Tripathi, learned SDR, has objected to the raising of this issue at this stage, pointing out that it is a question of fact which has not been raised or examined at lower levels and, therefore, it cannot be raised now. Shri R.M. Das, however, states that it is a question of law and there is no bar on raising this issue even at this stage. Apart from this point, Shri R.M. Das has reiterated that there has been denial of natural justice in his case, as al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical and are amply supported by the evidence on record and are not shown to be vitiated by any legal error or any grave injustice having been done to the appellants, would not be subject to any review at higher levels. In support of this contention, he has relied on the decision in the case of Shree agency v. S.K. Bhattacharjee and Others (1977 E.L.T. J-168)-S.C. The learned departmental representative has also referred to the recent Supreme Court decision in the case of McDowell Company Ltd. v. Commercial Tax Officer (1985 ECC 259) and stated that tax planning may be legitimate provided it is within the frame-work of the law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid payment of tax by restoring to dubious methods. The departmental representative states that what the appellants had done was nothing but an elaborate exercise in tax evasion. He also said that the amoung of penalty was fully justified and could not be considered disproportionate to the gravity of the offence committed. 7. We have carefully considered the facts of the case, the evidence on record and the submissions made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the name of M/s. Eastern Traders, Northern Agency, Bose Company, etc. There is reference by the appellants to other open market purchases but no evidence has been produced in support thereof. The name of M/s. Chemo Synthetics has been belatedly introduced now with a view to show that demand of duty for separate proceeds in respect of that duty-covered goods on which duty is being demanded of the appellants. We cannot permit such an argument to be imported by the appellants in their defence at this late stage as there is no evidence whatsoever to support this contention and this was never urged at the lower levels. The matter regarding M/s. Chemo Synthetics has been heard separately and will be decided on merits, on the basis of the facts and evidence on record in that case. The appellants have made a major issue of their grievance expressed at the level of appeal to the Collector then the Central Board of Excise and Customs and now before us that in their case the principle of natural justice has been violated and that they have been denied the opportunity to examine the relevant records. We have carefully considered this submission and we find from the correspondance exchang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments in support of the various Government departments that they were dealing with. We also find that no list of documents, which they required to further examine, were furnished to the department. There were some further letters on behalf of the appellants asking for inspection of records and, therefore, on 6th October, 1976, the local authorities again asked the appellants to come over on 12th October, 1976, for inspection of records, as desired by them. In response, the appellants asked for some more time for doing the needful on grounds of ill-health, pooja, etc. Again, a letter was addressed to the appellants on 27th October, 1976, giving them a last chance for inspecting the records by 15th of November, 1976. To this, a reply was sent by the appellants on 16th November, 1976, stating that they had started taking extracts/copies of records with effect from 1st November, 1976, but that they could not get all the papers on the basis of which charges had been framed because in show-cause notice there are entries of bills without challans and vice versa and that challans without bills . This point of the appellants is hardly tenable as the whole point of the Department s case w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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