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TMI Blog2009 (6) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... REPRESENTED BY : S/Shri Darius Shroff, Sr. Advocate and V. Ansulkar, Advocate, for the Appellant. Shri A.K. Prasad, Joint CDR, for the Respondent. [Order per : A.K. Srivastava, Member (T)]. - The present appeals are against a single adjudication order covering two SCNs, one dated 14-6-2004, relating to the period June, 1999 to December, 2002 involving duty of Rs. 21,46,143/- and the other dated 14-3-2005 relating to the period January, 2003 to May, 2004 and involving duty of Rs. 88,79,121/- + Rs. 24,60,936/- 2. Vide Stay Order dated 7-11-2006, this Bench had directed the appellants to pre-deposit an amount of Rs. 50,00,000/-. However, the appellants challenged the said Stay Order before the Hon'ble Bombay High Court in WP No. 4680 of 2007, and vide Order dated 19-7-2007, the pre-deposit amount was reduced to Rs. 21,00,000/- by the High Court. 3. The 1st appellants are a job-worker of M/s. Cadbury India Ltd (CIL). The appellants receive duty paid raw materials from CIL and manufacture cocoa Liquor/paste as well as bulk chocolates out of the raw materials in their Unit No. 1. The cocoa liquor/paste is used partly to manufacture bulk chocolate in their Unit No 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MGPs, during the period June, 1999 to December, 2002,.without payment of duty. They have merely made a sweeping statement that these items had been removed to Unit No. 2 from where, after re-packing, the goods were removed to CIL on full payment of duty. Neither before the original adjudicating authority nor in the present appeal, have the appellants provided any documentary evidence to establish that these 63 consignments removed from Unit No. 1 were actually received in Unit No. 2 and thereafter, cleared on payment of duty. The Ld. Jt. CDR has also mentioned, referring to para 3(x) of the O-I-O, that the Unit No. 2 had stopped manufacturing activities from 8-3-2002 and had stopped filing their monthly central excise returns from April, 2002, whereas, bulk of the clearances covered by the 63 MGPs, purportedly to Unit No. 2, relate to the period after April, 2002. The Ld. Joint. CDR also submitted that during the impugned period, the appellants had made a. number of clearances to Unit No. 2 under the cover of the central excise invoices and on payment of duty and as such they were aware about the correct legal requirements. They deliberately removed some goods, intermittently, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e period January, 2003 to May, 2004, it would come to Rs. 11.97 crores. The Cenvat credit debited during the said period was Rs. 3.35 crores, making the total duty paid during the period as Rs. 15.32 crores, whereas the duty actually required to be paid during the said period, as per the Department's own calculations, is Rs. 15,20,48,063/- Thus, there was no short levy of duty. The Ld. Counsel also referred to Rule 8 of the Central Excise Rules to contend that the duty liability is discharged as soon as the full payment, as per the TR-6 challan, is credited to the Govt. account by the due date. He has also relied on Circular No. 86/2003-Cus. dated 3-10-2003 of the Central Board of Excise and Customs (CBEC in short), which inter alia, state that the date of payment of central excise duties will be the date of presentation of the cheque in the bank subject to its realization. 13. The Ld. Jt. CDR has submitted that TR-6 challan is merely a mode of depositing the central excise duties to the Government account. After the cheque/draft accompanying the TR-6 challan is cleared by the bank, the amount is considered to have been credited to the Government account. The CBEC's Circular dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The Ld. Counsel's contention that the amounts debited in their PLA/Cenvat accounts towards the arrears of revenue as per O-I-O No. 29, dated 24-4-2000, should be ignored as the debits were done unauthorisedly and beyond his brief, by Mr. Hebalkar, cannot, therefore, be accepted. 15. An attempt has also been made by the learned counsel to contend that the said amount, as per the O-in-O dated 24-4-2000, was not payable since the issue involved therein was undervaluation of the cocoa liquor and similar demands for an earlier period had been set aside by the Tribunal on the ground that the cocoa liquor was held to be non-excisable. On the same ground, the demands issued for the subsequent period had also been dropped by the Department. The learned Counsel pointed out that the amount involved for the intervening period was confirmed vide the O-in-O No. 29, dated 24-4-2000, and this was, therefore, clearly not payable as the Order itself was non-est. The Ld. Jt. CDR submitted that this contention cannot be accepted because the O-in-O dated 24-4-2000 has not been set aside till date, but, on the contrary, the appeal filed by the appellants against the said O-I-O dated 24-4-2000 was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the goods cleared and the duties paid by an assessee, is through these returns. It is an admitted fact that though the actual quantity cleared was 69,31,248 kgs. , the quantity intimated to the Department was only 64,28,558 kgs. In other words, clearances of goods of quantity 4,12,957 kgs., were not reported by the assessee to the Department. It is also on record that duties amounting to Rs. 88,79,121/- were not paid on this quantity of 4,12,957 kgs. We, therefore, agree with the submissions of the Ld. Jt. CDR that this is a clear case of clandestine removal. 19. An important point raised by the Ld. Counsel for the appellants is that Mr. Hebalkar was a rogue employee, who fabricated and manipulated the statutory/records, for which he had no authority and, therefore, the company cannot be held responsible for the acts of an employee, who exceeded his brief. He has relied in the judgment of CESTAT, Bangalore in the case of MNS Exports Pvt. Ltd. v. CC, Bangalore [2005 (190) E.L.T. 124 (Tri.-Bang.)]. The Ld. Counsel also submitted that at the time of his cross-examination before the adjudicating authority on 10-1-2006 (and not 10-10-2004, as wrongly mentioned in the impugned adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hebalkar acted within his authorization and, therefore, the company will have to be held responsible for the acts of Mr. Hebalkar. We also note, with approval, the Ld. Jt.CDR's reference to Sec. 238 of the Contract Act, 1872, which talks of the liabilities of the principal for the acts of his agent. The relevant section is reproduced below : "238 : Effect on agreement, of misrepresentation or fraud by agent. - Misrepresentation made or fraud committed by agents acting in the course of their business for their principals have the same effect on agreements made by such agents as if such misrepresentations or frauds had been made or committed by the principals; but misrepresentation made or frauds committed, by agents in matters which do not fall within their authority, do not affect their principals." 24. We also note that in his statements dated 30-7-2004 and 8-10-2004, Mr. Hebalkar had clearly admitted that it was not only his boss Mr. S.W. Ketkar, General Manager, who was aware of the manipulations done by him in the PLA and ER-1 returns, but also the management. It is only at the time of his cross examination on 10-1-2006, i.e. after over 15 months, that he has changed his ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the appellants mentioned that after correcting the manipulations done by their rogue employee, Mr. Hebalkar, they had filed revised ER1s for the disputed period, which were rejected by the Commissioner. He submitted that for the same period, there was another dispute (not the subject matter of the present proceedings) regarding the excess/double Cenvat credit of Rs. 8,25,698/- They had reconciled the Cenvat details and submitted revised ER1s for the whole period. Though the Additional Commissioner had rejected the revised ER1s vide his O-I-O dated 10-7-08, yet the Commissioner (Appeals) vide O-I-A No. PII/PAP/23/2009, dated 9-2-2009 had accepted the revised ER1s. The learned Counsel contended that once the revised ER1s have been accepted for the same period, the manipulations done by Mr. Hebalkar in the present cases also stand reconciled and accepted by the Department and, therefore, the question of any short levy did not arise. We are unable to agree with this contention of the learned counsel, as this O-I-A/dated 9-2-2009, does not at all advance their case. It is not clear from the O-I-A as to whether the appellants had brought to the notice of either the adjudicating au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the tentative amount and interest intimated by the Anti-Evasion Unit at the investigation stage. Later on, after completion of the investigations, the actual amount evaded came to Rs. 21,46,143/- for which the SCN dated 14-6-2004 was issued. Since the correct amount has been demanded as Rs. 21,46,143/- in the SCN dated 14-6-2004, there is no question of demanding, once again, the same amount (or even the higher amount of Rs. 24,60,936/-) in the second SCN dated 14-3-2005. Thus the adjudication order, so far as it relates to the 2nd SCN dated 14-3-2005, stands modified by setting aside the demand of Rs. 24,60,936/-. 29. The learned counsel, Mr. V. Ansulkar for the 2nd appellant, Mr. S.W. Ketkar, General Manager (in Appeal No 2277/06-Mum), has argued that Mr. Ketkar had not abetted the manipulations of Mr. Hebalkar and that Mr. Hebalkar had done all the entries on his own without Mr. Ketkar's direction or knowledge. We have examined these contentions already and do not accept the same in view of our findings in paras 21 to 26 above. 30. The learned counsel for the 2nd appellant has also argued that since Mr. Ketkar had not physically dealt with the goods, which had been allege ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e being in force. The High Court has held on the facts in this case that Sitaram Agarwala cannot be said to have been concerned in any manner dealing with prohibited goods inasmuch as he was merely negotiating with the Chinese accused for their purchase but the deal had not been concluded. The view which found favour with the High Court thus was that if the deal had been completed, Sitaram Agarwala could be said to have been concerned in dealing with the prohibited goods but as the deal was not completed and he was merely attempting to purchase the goods it could not be said that he was in any way concerned in any manner dealing with them. We are of opinion that the view taken by the High Court is not correct. The words "in any way concerned in any manner dealing with prohibited goods" are of very wide import. It is neither desirable nor necessary to define all manner of connection with the prohibited goods which might come within the meaning of the words "in any way concerned in any manner dealing with such goods ". It will depend on the facts found in each case whether it can be said that any person was concerned in dealing with such goods. We shall therefore confine ourselves to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tervened does not in any way mean that Sitaram was not concerned in dealing with the smuggled gold. The evidence shows that there must have been a previous arrangement with the Chinese accused to purchase the smuggled gold. Sitaram went to the appointed place and met the Chinese accused surreptitiously and had a large sum of money with him to pay for the gold. He had sat down with the Chinese accused in the taxi and there is no doubt that if the taxi had not been stopped, the transaction for the purchase of the smuggled gold would have gone through. In these circumstances even though Sitaram had not come into actual possession of the smuggled gold before the police intervened, there is no doubt that he was concerned in dealing with prohibited goods. We are therefore of opinion that the High Court was in error in holding simply because the purchase was not complete that Sitaram was not concerned in dealing with the smuggled gold which was found with the Chinese accused. The acquittal of Sitaram on this ground must therefore be set aside. " 31. Thus, we are of the firm view that Mr. Ketkar cannot be given relief from penalty merely because he did not physically deal with the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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