9911796707
TMI Blog1992 (3) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... uring them according to customer s specification. The customers who received such containers used them for packing goods for sale. These containers were being manufactured out of the coated steel sheets of different thickness. In the course of scrutiny of records of the appellant company, it was noticed that many times the customers used to return the goods, sometimes in full, sometimes in part, stating the reasons for such return in their return challan. The appellants used to bring back those containers in their factory at Kaikhali under Rule 173H of the Rules. They used to submit intimation of receipt of such goods to the jurisdictional officer of Central Excise, but in no case they mentioned any reasons for such return in the intimation submitted to the Department excepting that those were received for repair. Since no reasons were mentioned in the intimations so submitted, in order to ascertain the correct position, the factory was visited by the Officers of Calcutta F Division on 11-12-1985 when the said company handed over the relevant D-3 intimations, passing challan and the register of returned goods for further scrutiny. On scrutiny of the records of the appellant it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized records revealed that the appellants removed 2,72,229 pcs of metal containers of assorted sizes, under cover of Nil duty G.P. is issued under Rule 173H of the said Rules between July, 81 and Nov., 85 as mentioned in the annexure to the show cause notice. For reasons stated above, there was reasonable belief that the containers so removed under Nil duty G.P.ls were fresh ones removed in place of the rejected ones. The value of the goods was worked out on the basis of assessable value at the material time and total figure came to Rs. 12,32,895.68. On the basis of above assessable value the duty was calculated at Rs. 1,84,934.40 (Basic) Rs. 9,246.72 (Spl.), Total Rs. 1,94,181.12. The appellants were, therefore, called upon by a notice dated 12-6-1986, issued by the department to explain as to why the Central Excise duty amounting to Rs. 1,94,181.12 should not be demanded and realised from them under Rule 9(2) of the Central Excises Salt Act, 1944 and why a penalty shall not be imposed upon them under Rule 173Q of the Central Excise Rules, 1944. 3. The appellants filed a reply to the show cause notice. It was mainly contended therein that they had submitted D3 intimation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession, or contravention of rules with intent to evade payment of duty. Thereafter, a personal hearing was granted to the appellants and the learned Collector passed the impugned order. 4. The learned Advocate Shri Tapan Chandra Dutta appearing for the appellants contended before us that the show cause notice does not mention the ingredients of Section 11A and also does not mention anything with respect to the allegation of fraud, or misstatement, or suppression of fact or clandestine removal with an intent to evade payment of duty. Therefore, the show cause notice having been issued after the period of six months is barred by limitation. In support of his contention, he relied on the following decisions: (1) 1980 (6) E.L.T. 121 (2) 1983 (14) E.L.T. 1994 (3) 1984 (17) E.L.T. 499 (4) 1989 (40) E.L.T. 276 5. It was further contended that the appellants factory being under production based control during the relevant period was visited by the Central Excise Officers and they have conducted all checks from stock to account and they have satisfied themselves about the correctness of the records and documents maintained by the appellants. In the circumstances, the question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame is liable to be set aside. He also drew our attention to the letter written by M/s. Hindustan Levers dated March 18th, 1986 wherein the supply made by the appellants which were rejected by them were intimated to the department. He, therefore, drew our attention that except in two cases all the other articles were described by Hindustan Levers as rectifiable . On the basis of this record, the finding of the adjudicating authority that the containers could not be repaired is against the facts available in this case. With respect to the reply issued by Indian Oil Blending Ltd. it was contended before us that they have only stated that they will not be able to say whether rejected containers can be repaired at fabricator end. But they only accept containers meeting purchase specifications whenever supplied. The learned advocate therefore contended that from their reply also it cannot be said that what was sent to them was fresh containers manufactured by the appellants. He also drew our attention to the letter addressed by Hindustan Lever Ltd. dated 20th May, 1985 wherein the abovesaid company had accepted supply of 2,000 pcs of 5 kg Dalda containers which were rejected earlier fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... colour defects, if there be any, cannot be repaired. Similarly, the containers which had already been printed with thinner gauge tin cannot, by any process be made into tin of thicker gauge: so is vice versa. He also pointed out that if rust is to be removed by use of some emery paper, then that process will leave an irreparable spot on the container and hence the inference that can be drawn is that the returned goods could not have been repaired without serious damage to the get-up of such containers. In this connection, he drew our attention to the reply furnished to the department by Indian Oil Blending Ltd. He pointed out that the abovesaid company had clearly stated that they accept containers meeting purchase specification whenever supplied. In that view of the matter, he stated that when they have rejected the containers as not being of the specified quality, the question of getting them repaired does not arise. 9. Shri Biswas also pointed out that the appellants had not maintained any repair register and in the D3 intimation, they had not stated as to what repair was made in the containers and in the absence of any record to show that the returned containers were repaired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demanded in the show cause notice. Reliance was also placed on the decision reported in 1983 (14) E.L.T. 1994. Relying on the abovesaid decision it was contended that if there were no allegation of fraud or misstatement or suppression of facts in the show cause notice, the appellants do not fall within clause 1 of proviso to Section 11A of the Central Excises and Salt Act so as to attract the period of limitation to govern the adjudication. Reliance was also placed on the decision reported in 1984 (17) E.L.T. 499 wherein it was held by the Tribunal that the authorities cannot invoke Rule 9(2) on the ground that the goods have been cleared without payment of excise duty merely because the department has taken a view that the goods are excisable long after the goods had been cleared from the factory. Relying on the abovesaid observation it was contended by the learned advocate that when the department did not object, when they were removing the tin containers without payment of duty as repaired ones, it cannot now be contended that what was removed was freshly manufactured ones. 12. We have considered the submissions and we have looked into the allegations made in the show cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of account with details of re-processing/repairs for the returned goods. The said company being an old Central Excise licensee were well aware of the provisions of the aforesaid Rules and the Trade Notice and that is why they had submitted D-3 intimation for their returned goods. But the records maintained by them do not indicate the details of the processes which the subject goods had undergone. The records merely show the quantity received for repairing. The said company in their reply dated 19-8-1986 admitted that the reasons for return of the goods should have been fully detailed in D-3 intimation and that the failure to do so was a simple clerical omission. The subsequent contradictory argument of the said company that the full details of the repair work were not required to be intimated is not tenable. Thus the said company had failed to comply with the provisions of the prescribed procedure and also to intimate the reasons for rejection although they were well aware of their obligations to do so. As such the said company had wilfully suppressed the material facts from the Department with intent to evade payment of Central Excise duty on manufactured goods in the guise of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and they were checking the D-3 intimations as well as the other records like GPIs, customers challans and after satisfaction they have signed the entries. Those records which are in the possession of the Department should have been verified to come to one conclusion or the other. They have also stated that D-3 intimations carrying proper cross reference of the transport document were duly submitted to the Department so as to enable them to verify the particulars entered in the D-3 intimations. This aspect is very material for finding out whether there was any actual suppression of facts. These submissions of the appellant were not considered with respect to the D-3 intimations and the challans mentioned by them. The appellants also had stated that in 90% of such cases the proper officer actually visited the factory and verified the goods physically with concerned G.P.ls and customers challans and after their satisfaction they signed the entries with date and initial. This also has got an important bearing on the aspect of limitation. The records are in the custody of the Department and with respect to the reference to the records this plea of the appellants were not looked into b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding cases or applications affecting rights of parties is also a mandatory requirement to be fulfilled in consonance with the principles of natural justice. It is no answer at all to this legal position that for the purpose of expeditious disposal of cases a laconic order like dismissed" or rejected will be made without passing a reasoned order or a speaking order. It is not, however, necessary that the order disposing of a writ petition or of a cause must be a lengthy one recording in detail all the reasons that played in the mind of the court in coming to the decision. What is imperative is that the order must in a nutshell record the relevant reasons which were taken into consideration by the Court in coming to its final conclusions and in disposing of the petition or the cause by making the order, thereby enabling both the party seeking justice as well as the Superior Court where an appeal lies to know the mind of the court as well as the reasons for its finding on questions of law and facts in deciding the said petition or cause. In other words fair play and justice demands that justice must not only be done but be must seen to have been done." 17. It is thus seen that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that none of the consignees has stated that he received newly manufactured goods but he only stated that goods freshly received by them in lieu of returned goods were in conformity with their specification and quality control. 19. Shri R.K. Banerjee, Manager of Indian Oil Blending Ltd., in his letter dated 3-2-1986 addressed to the Assistant Collector of Central Excise, Calcutta F Division stated that in their company when any excisable goods are received, the practice is to check whether they are covered by the gate pass. He also stated that it was not possible for them to say whether that lot comprised freshly manufactured goods or goods returned by them earlier after removing the defects and making as to the forms of specification. Thus the answers given in the cross-examination were also not taken into consideration by the learned adjudicating authority. On the contrary, it was stated in the adjudication order that some of the consignees with whom enquiries were made stated that for their purpose all supplies were treated as fresh supplies subject to the quality control check. In the first instance, it was not mentioned in the adjudication order as to who were the consignee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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