9911796707
TMI Blog1993 (8) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... Worli, Bombay - 400 018 and their factory at 52, Hide Road Extn., Calcutta-700 027 (hereinafter referred to as the appellant-Company) have been charged for contravention of the provision of Rules 9(1), 173F, 173G(1), 173G(2) read with Rules 52A, 173G(4), read with Rules 53 and 226 of the Central Excise Rules, 1944 (hereinafter referred to as the 'said Rules') and the provisions of Government of India Notification No. 118/75-C.E., dated 30-4-1975 inasmuch as the appellant Company were alleged (a) to have clandestinely removed excisable non-duty paid switchgear materials falling under Item No. 68 of the erstwhile First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as the 'said Schedule') altogether valued at Rs. 2,72,29,239.36 (goods not available for seizure) from the said Company's factory located at 52, Hide Road Extn., Calcutta - 700 027 (b) without determination and payment of Central Excise duty payable thereon (c) without being covered by any Central Excise gate passes and/or (d) without covering in Annexure B Challans as envisaged in Calcutta Collectorate Trade Notice No. III/GL-53/75, dated 25-6-1975 issued for implementation of Notification No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verification report on the plea that the said report was based on the said officers' own findings, inasmuch as the said company did not participate in the process of physical verification of such goods. The Superintendent of Central Excise in his letter dated 11-2-1982 informed the said company, inter alia, that under their advice, Shri K. Ray Mallick, Stores-in-charge of the said company's Calcutta Works and their staff assisted the Central Excise Officers in identification and physical verification of the stock of such goods in their factory and the said company were given an opportunity to check the correctness of the figures relating to the said goods again by physical verification in the presence of the said officers and to furnish such verified figures duly authenticated by the said company. 5. The said company in their letter dated 11-2-1982 stated, inter alia, that due to movements of goods after physical verification on 7-2-1982, they were not able to verify the stock physically as on 7-2-1982. The Superintendent in his letter dated 11-2-1982 made it clear to the said company that when they were not agreeing to authenticate the physical stock verification report dated 9- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25-2-1982 intimated the said company that as the verification report revealed discrepancies in many items, the connected records and documents were required to be taken for further scrutiny in the range office. The said company in their letter dated 25-2-1982, inter alia, informed that the Superintendent of Central Excise did not allow sufficient time to explain the alleged discrepancies and stated that they required time. As requested by the said Company, the records were not taken out on 25.-2-1982 and those were kept in the said Calcutta Works till 5-3-1982 so that they could explain the discrepancies. Instead of availing the opportunity of explaining the discrepancies, the said company in their letter dated 4-3-1982 requested inter alia, for handling back the documents and records to them and thus to allow them 15 days' time to explain the alleged discrepancies and wanted to have a joint inspection of goods physically and verification of records at a suitable date after handing back the documents to them. It appeared to the department from the aforesaid letter of the said company that they were least interested to explain the discrepancies and were bent upon taking back the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls falling under Item No. 68 of the said Schedule at the said Calcutta Works as evident from the stock verification report, a detailed investigation was required as it appeared that no proper and complete record was maintained by the said company for the accountal of such non-duty paid materials from 1975 in their Calcutta Works as per the provisions of Notification No. 118/75-C.E., dated 30-4-1975 read with Calcutta Collectorate Trade Notice No. III/GL-53/75 dated 25-6-1975. The records maintained in their Calcutta Works failed to show proper and up to date accountal of such non-duty paid goods and more particularly, the accounts maintained by the said company did not show any particulars of use of non-duty paid materials in their factory. 15. The said company voluntarily submitted various records & documents viz. inventory sheets of switchgear materials and details of shortages and excesses said to have been found by them during stock-taking undertaken by them in the said Calcutta Works for the periods from 30-9-1976 to 30-9-1981 vide their letters dated 22-4-1982 & 6-5-1982 and issue slips, equipments received notes for various periods ranging from 1976 to 1981 and one register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n maintained from 14-8-1975 to 15-3-1979 (in respect of some items). Col. Nos. 12(a), 12(b), 13 & 14 representing 'Date of issue', 'Quantity issued', 'Challan under which issued' and 'Balance' respectively of Annexure 'C' Register were not filled in. In a few cases, there were entries of total issues during one year. But in such cases also there was no mention anywhere which types of goods were included in those total numbers nor there was any explanation how those total numbers were arrived at. (iv) It further appeared that the said Company did not enter many items covered by many Gate Passes in form G.P. 2s in their Annexure 'C' Registers. A list of such G.P. 2s not entered in Annexure 'C' Registers was enclosed with the Show Cause Notice as Annexure 'E'. (v) It further appeared that the said Annexure 'C' Registers for the period from 14-8-1975 to 15-3-1979 were actually written only in 1980 as stated by S/Shri D. Banerjee and N. Mazumder of the said Co., inasmuch as in columns 4 and 9(a) of the Annexure 'C' Register No. 1 (Pages 41 to 44) the challans and dates were shown as under :- Challan No. & Date Date of receipt of the goods 0050 Dated 21-1-1977 7-2-1977 0051 Dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also confirmed that the materials removed under Works Challan No. 661533 dated 9-9-1976 were not covered by G.P. 1 and no duty was paid on them. Shri Das further confirmed that the goods covered under Works Challan No. 654088 dated 24-8-1975 were removed without payment of duty. Similarly, he affirmed that materials removed under works Challan No. 661131 dated 20-1-1976 were removed without payment of Central Excise duty. Shri Das also stated that the goods covered by Works Challan No. 660108, 660106, 660109, 660111 all dated 10-8-1978 had no entry either in Gate Passes or in P.L.A. (ix) It appeared on scrutiny of the seized records that the said company had cleared many items of non-duty paid goods received under G.P. 2s on payment of Central Excise duty under G.P. 1s from their Calcutta Works. Such payments were made by the said company by way of debiting the duty in P.L.A. in their Calcutta Works. In some cases the said company took prior permission from the jurisdictional Central Excise authority, but bulk of such clearances were effected from their Calcutta Works as a matter of routine, mostly to their Calcutta sales office and/or to different regional offices of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total difference of each item. Such statements were also signed by the authorised representatives of the said company on 5-11-1982 and 10-12-1982 in token of their acceptance and correctness of the statements. On the basis of the aforesaid compilation made by the representatives of the said company containing the details of receipts and issues of non-duty paid switchgear materials in their Calcutta Works vis-a-vis the difference between the total receipts and total issues in respect of each item, a show cause notice was issued. The final compilations made by the representatives of the said company and duly endorsed by them were annexed to the show cause notice and marked Annexure 'F'. 19. Shri Vinode Kumar Karia, partner of M/s. A.F. Fergusan & Company the auditors of the said Company in response to summons issued under Section 14 of the said Act, appeared before the Assistant Collector, C.P.O., Calcutta on 27-8-1982 and stated, inter alia, that M/s. A.F. Fergusoan & Co. had been the auditors of the said Company for many years. He stated that they were not responsible for the correctness of the accounts maintained by the said Company and that the said Company were alone responsib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir reply Ref. CW/CE/717/CNG/JH dated 18-4-1983 to the show cause notice mainly submitted the following points :- (i) The show cause notice was barred by the provisions of limitation under the said Act and in particular the provisions of Section 11A inasmuch as duty exemption had been availed of for the period from August, 1975 to 6-2-1982 while the show cause notice had been issued on 7-1-1983 under Section 11A of the said Act, show cause notice had to be issued within 6 months from the relevant date. (ii) The allegation that they contravened the provisions of Rules 9(1), 173F, 173G(1) read with Rule 52A, 173G(4) read with Rules 53 and 226 of the Central Excise Rules, 1944 and the provisions of Notification No. 118/75 dated 30-4-1975 by clandestinely removing the excisable switchgear materials is not substantiated by evidence. No evidence to establish clandestine removal of components has been produced. (iii) Under Notification No. 118/75, dated 30-4-1975, the only condition to be satisfied was that the proper officer was to be satisfied that the goods were intended for a specified use. The term 'proper officer' in the said Notification referred to the officer having jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se floods as well as with the opening of a new factory in Joka and during the shifting the records and materials in December, 1979/January, 1980, some of the records had been possibly lost. (vii) The figures of inventory difference as considered from year to year might be considered and the value of such difference came to Rs. 33,876.10 which was insignificant considering the corresponding volume of business. (viii) The procedure prescribed under Notification No. 118/75 dated 30-4-1975 for accounting the goods was based, more or less, on the procedure laid down in Chapter X of the Central Excise Rules, 1944. These provisions provide as to how the duty was to be determined on the shortages as well as on the excess quantity found. In such cases imposition of penalty would not arise. 21A. After the reply was filed by the appellants, a personal hearing was granted to them. Their learned Consultant Shri S.P. Kampani as well as the Officers of the appellant Company attended the personal hearing and after grant of the same, the impugned order was passed. The learned Consultant contended before us that duties of excise are leviable on goods manufactured or produced in India under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Collector of Central Excise, Calcutta-I had no jurisdiction to deal with these cases and adjudicate these. The citation J.K. Cotton Spg. & Wvg. Mills Ltd. and Anr. v. UOI [1981 (8) E.L.T. 887 (Delhi)] is not relevant, as quoted by the SDR. (b) Surreptitious removal/time bar. In this regard he contended before us that this case adjudicated by the Collector of Central Excise, Calcutta-I is time-barred by limitation as the show cause notice has been issued much beyond the 6 months' time limit. The five years' limit could not operate as none of the ingredients mentioned in the proviso to Section 11A of the Central Excises and Salt Act, 1944 was there. There was no questions of fraud, collusion or any wilful mis-statement or suppression of facts. The allegation that the goods were removed surreptitiously the onus for which rested on the Department has not been discharged. The Preventive Officers produced a list of 38 cases when Shri Bajpai was the Collector of Central Excise, Calcutta-1. Out of these 38 cases two cases appeared twice and this reduced the number to 36 cases out of which 24 cases covered goods removed in 1975. The general principle of first come first served is fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty in the maintenance of excise records alleged, the department is equally responsible for it. Not only under the Central Excise law but even under the normal accounting procedure excesses and shortage in terms of value as well as quantity have to be adjusted. Quantity adjustments are carried out in the kardex or individual stock cards whereas corresponding value adjustment after determining the net effect shortages against excesses are carried out in the Books of Accounts. Thus duty is liable to be paid only on the net inventory difference (shortage) if any. In this case, this was not done. The excesses were referred to Collector of Central Excise, Bombay and shortages were dealt with by the Calcutta-I Collectorate. The fact that excesses were referred to the Collector of Central Excise, Bombay also shows that the Collector had his doubts about his jurisdiction and therefore did not adjust the shortages against the excesses. In respect of a particular case it was found that shortage shown in Calcutta Collectorate records was nowhere near the excess shown in Bombay Collectorate records. This has been dealt with in the relevant appeal viz. E-65/87. Even at the time of hearing this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the time limit can be extended to a period of 5 years provided there has been a case of fraud, collusion, wilful suppression of facts, mis-statement and surreptitious removal. The department's case does not rest on fraud, collusion, wilful mis-statement or suppression of facts. The only allegation rests on surreptitious removal only. The onus to prove surreptitious removal rests on the department which they have failed to discharge. A list of 38 cases alleging surreptitious removal was produced before the then Collector of Central Excise. It was explained that 2 of the cases were repeated while in one case the goods was imported. In 24 cases the goods were cleared in the year 1975. These were definitely prior to the pre-1975 Budget Stock. These could not have been received without pre-planning, indenting and receiving these at a day's notice. Even at the time of hearing the learned SDR could not elaborate and explain his arguments. Even 38 challans granting for the sake of argument but not admitting on the basis of previous submissions do not indicate surreptitious removal, in the face of clearance of more than thousands of challans issued during the relevant period. The depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. As against it 7558 Nos. plus 287 sets were cleared. The value of the cleared switchboards was Rs. 12,18,10,818.59 and the duty paid on this quantity was Rs. 47,55,440.16. Thus all the inputs which went into the production of the switchboard discharged their liability to pay the duty. It was also submitted that the auditor's reports/statement show gross shortage valued at Rs. 99,000.00 and excess valued at Rs. 66,000.00. The net shortage was of goods worth Rs. 33,000.00. Before concluding it was also submitted that the excess was determined on the basis of kardex meant for stock items and the shortages were determined on the basis of receipt and issues. Appellants were also eligible to remove the goods under proforma credit procedure and/or under the set-off procedure. But appellants preferred to follow the provision of Notification No. 118/75-C.E., dated 30-4-1975, because of the facility provided therein. After these cases they avail of modvat procedure. To sum up and conclude the arguments, he reiterated. (a) The Collector of Central Excise, Calcutta-I had no jurisdiction. (b) No evidence in support of surreptitious removal was produced by the Department. (c) The Show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain proper, complete and adequate accounts. The RG 16 registers as per Rule 194 were not maintained up to date. Shri Dutt Majumder also pointed out that on examination of the issues recorded in the RG 16 registers, with respect to those in serially numbered issue slips, it is seen that the issues featuring in the said registers do not agree with the actual issues ascertained from the issue slips. A list in this regard was shown in Para 2G(vii) of the show cause notice. Hence, the appellants did not maintain proper records. Therefore, the only method left with the Department was to take into account the total receipt of non-duty paid goods transferred to their Calcutta Works from their Bombay factories under GP 2s and also from their Calcutta Works under Annexure C registers and to deduct the issues for use in the manufacture of excisable goods in the factory premises and those removed from the factory on payment of Central Excise duty in order to find out the book balance as on 14-6-1983. He also pointed out that the appellant Company was given full opportunity to submit the records including the private records for the period from 7-2-1982 to 13-6-1983. They submitted the GP 2s r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification No. 118/75 require the proof of actual use of the non-duty paid goods. The learned SDR contended that the words, 'intended use' appearing in the above Notification, mean 'actually used'. If the goods were not actually used in the manufacture of other excisable goods, it would mean that they were not removed for the intended use. Hence if the appellants had not shown to have used these goods brought from their factories for the manufacture of other excisable goods and when they could not account for the same, they were liable to pay the duty. 27. In order to support his contention he drew our attention to Rules 194 and 196 of the Central Excise Rules. It was his contention that the appellant is claiming exemption of the duty in terms of the Notification and it is for them to prove that they are entitled for the exemption in this regard. If they are unable to prove the same and when the Officers have detected that the appellants were not maintaining the records in a proper manner, they are liable to pay duty in terms of Rule 194 read with Rule 196 of the Central Excise Rules, 1944. He also stated that it is a settled position of law that the burden is on the party claimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Majumder contended before us that the appellants did not maintain proper and complete record for the non-duty paid goods brought from their Bombay factory. Hence, the only alternative left with the department was to take account of the total receipt of non-duty paid goods transferred to their Joka Works from their Bombay factory under GP 2 and also from Calcutta Works under Annexure 'B' Challans and to detect the issues for views in the manufacture of excisable goods in the factory premises and those removed from the factory on payment of Central Excise duty in order to find out the deficit as on 6-2-1982. He also contended that for this purpose the appellants were given full opportunity to submit all the relevant documents including the private records for the period from 16-8-1979 to 5-2-1982. They also confirmed in the letter dated 11/12-8-1982 that they had submitted the remaining documents and they had no further documents in this regard. In fact they had submitted some other issue slips, E.R. Nos. etc. wherein the issue of GP 2 goods for use in the manufacture of other excisable goods were mentioned. In the above-said letter they had stated that they had no further recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealities Endowment Trust, Hyderabad v. C.I.T. (2) 1984 (15) E.L.T. 32 - M/s. Brook Bond India Ltd. v. Union of India & Ors. 31. Shri Majumder also contended that clandestine removal of non-duty paid goods can also be proved by circumstantial evidence and it is not always necessary that direct evidence should be produced in a case. He, therefore, relied on the decision of the Supreme Court in the case of D. Bhoormull and contended that the department is not expected to prove its case with mathematical precision. Each case, according to him, has to be decided on the facts and circumstances available and no prescribed form can generally be adopted in all the cases. He also contended that the case law relied on by the learned Counsel Shri Kampani in the case of Oudh Sugar Mills is not applicable to the facts of this case. 32. He pointed out that the appellant did not submit declarations in Form D-3 in quite a number of cases which are enumerated in para 2H(iv) of the show cause notice. This was required to be done under Trade Notice No. 111-CE 53/75 dated 25-6-1975. The appellant did not explain the said allegations. 33. With respect to the argument that no annual stock verificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e correct and the same was not disputed. In such circumstances, he justified the orders and stated that the Appeal may be dismissed. 34. In view of the above submissions, the following points arise for our determination:- (a) Whether the officers of the Calcutta Collector of Customs had jurisdiction to demand the duty from the appellants with respect to the goods which were cleared from their Bombay factories to their Joka factories at Calcutta? (b) Whether the reconciliation statement submitted by the appellant Company could be accepted and if so, whether they are liable to pay the duty demanded in this case? (c) Whether the surreptitious removal of the goods by the appellant Company is proved in the facts and circumstances of the case? (d) Whether the whole demand is barred by limitation? (e) Whether order of demand and imposition of penalty are liable to be set aside? 35. As far as the first point is concerned it was strenuously contended before us by the learned Consultant, Shri Kampani that duties of excise are leviable on goods manufactured or produced in India under Section 3 of the Central Excises and Salt Act, 1944 and these are to be collected under the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot on the person to whom the manufacturer or producer sells the goods. In this case, the manufacturers are the appellants themselves. Therefore, that decision also is not applicable to the case. 38. Reliance was also placed on the decision of the Champala & Co. v. Collector of Central Excise, Bangalore reported in 1978 (2) E.L.T. (J 492) (Mysore). In that particular case, the goods removed from the manufacturer's factory without payment of excise duty were seized from the premises of a purchaser. The Hon'ble High Court held that though the goods are liable for confiscation, that liability to pay excise duty as well as penalty is on the manufacturer or producer and not on the purchaser. Here in this case, the manufacturer is the appellants themselves. M/s. Siemens Ltd. being the manufacturers availed of exemption of the whole of excise duty on goods falling under Item No. 68 of Central Excise Schedule, manufactured in their Kalwa and Worli factories at Bombay and transferred to their Joka Works at Joka, Calcutta for use in the production of further excisable goods in terms of Notification No. 118/75-C.E. Therefore, that decision is also not applicable to the facts of this case. 39 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lcutta units of the same Company. It is for this reason the verification of non-duty paid goods was carried out in the Calcutta Works by the officers of the Calcutta Collectorate. The above-cited decisions are thus distinguishable from the facts and circumstances of this case. 41. Reliance was also placed on the decision of the Calcutta High Court reported in 1978 (2) E.L.T. (J 84) (Calcutta) in the case of Electric Lamps v. Collector of Central Excise, Calcutta and Others. In that particular case, their Lordships of the Honourable High Court of Calcutta referred to the decision of the Supreme Court in Voltas case wherein the Hon'ble Supreme Court declared that the wholesale cash price under Section 4 of the Excise Act cannot include the post-manufacturing cost such as selling cost and profit or any other cost. Their Lordships also held in that particular case that the excise duty is leviable only on the wholesale cash price of the manufacturer and this will include the manufacturing cost and the manufacturing profit. On that analogy, it was contended that the manufacturer alone is liable to pay the excise duty. This decision also does not apply to the facts of the present case on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on from payment of duty was available to the goods falling under Item No. 68 manufactured in the factory and intended for use in the factory in which they were manufactured or any other factory of the same manufacturer. Therefore, when the factory at Joka belonging to the above-captioned appellant Company, fails to account for the use of the goods in the production of further excisable goods in the factory, the officers of the Calcutta factory in whose jurisdiction their Joka factory is situated, have the power to demand the duty on the same. At the time when the goods were removed from Bombay factory, the same were removed for the use of those goods in the Joka factory for production of further excisable goods. Once if the Joka factory fails to account for the same, then the jurisdiction certainly lies with the Central Excise officers of the Calcutta Collectorate. 44. Reliance was also placed on the following decisions : (i) 1986 (24) E.L.T. 484 (Kar.) in the case of Inspector v. S.T. Venkataramanappa; and (ii) 1986 (25) E.L.T. 939 (T) in the case of Calcutta Paper Mills Manufacturing Co. v CEGAT. In the above cited cases also, Notification No. 118/75-C.E., dated 30-4-1975 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gordon. Mr. Shah relied on certain rules, namely, Rules 2A(a) (b), Rule 2(11), Rule 4, and Rules 43 and 44 of the Central Excise Rules. It is unnecessary to advert at any length to these rules for the simple reason that the raid having taken place in Bombay from where the incriminating material, viz. documents, papers, etc., were seized from the residence of the 2nd petitioner at Marine Drive and Head Office of the 1st petitioner at Hanuman Street, and the evasion of duty having been detected in Bombay, the Officer on Special Duty of the Bombay Collectorate was competent to hold the enquiry and pass his order. The principles laid down in the above decision squarely apply to the facts of this case. The search was conducted by the officers of the Calcutta Collectorate and the units of M/s. Siemens Ltd. in Bombay and Calcutta are not the factories of different manufacturers, but are different factories of the same manufacturer. Hence the Central Excise officers within whose jurisdiction the Joka Factory is situated are responsible for the protection of revenue in respect of the non-duty paid goods received at the factory of the same manufacturer at Joka. Since they were also maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced before the Officers at any time before this date of scrutiny. It was also seen that in most cases, the issue columns had not been filled up. The columns like 12A, 12B, 13 and 14 representing "date of issue", "quantity issued", "challans under which issued" (each separately) and "balance" were not filled in. The appellant also did not enter several items of goods which were covered under G.P. 2s in this Annexure 'C' Register. A list showing those G.P. 2 goods not entered in the Annexure 'C' Register of their Calcutta Works was also furnished in Annexure 'E' to the show cause notice. But the appellant has not furnished any explanation for this omission on their part. Further, Annexure 'C' register for the period from 17-4-1975 to 1978 (upto 16-11-1978) were written in the year 1980. This clearly goes to show that no account for non-duty paid G.P. 2 goods had been maintained by the appellant during the said period. They have also not maintained any account for the period from 1978 to 14-5-1980. From the adjudication order, it is seen that their Works Manager, Shri A.K. Roy, during the hearing date on 28-3-1984 had admitted this lapse. This observation in the adjudication order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cords in respect of G.P. 2 goods. 49. But strong reliance was placed on the fact that the statement given by the Officers by endorsing the stock verification is not binding on the appellant. But this argument of the appellant cannot be accepted in view of the several correspondences which are produced in the paper-book filed by the appellants themselves. In the letter dated 12-2-1982 the department had stated that their representative had suppressed and withheld the material information and documents till 11-2-1982. It was also stated in that letter that as regards the verification of stock on 6-2-1982 and in view of the technicalities involved in identification and verification of the items brought under G.P. 2, the stock of that items were accounted by the appellant's employees attached to the store Section in the presence of the representatives and Officers of the department and both of them being satisfied that the correctness of the stock signed the verification report. In that letter, the department also has alleged that in view of these facts it is not correct that the entire physical inventory including accounting was conducted by the Officers of the department alone. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pation of the appellant's representative Shri I.B. Banerjee on 6-2-1982. It was also mentioned clearly that such verification had been complete and it was not known why Shri Banerjee was withdrawn since 7-2-1982. Therefore, it was clearly stated in that letter that the non-admission of variations in the stock, as pleaded by the appellant, are not based on any facts and no cognizance of the same can be taken. In the same way, a number of correspondences were issued by the Central Excise Officers to the appellant company reiterating that the joint inspection report dated 6-2-1982 and 7-2-1982 was the correct one and no documents in this connection were produced by the appellant company to disprove that it is in any way false. In spite of these things, the appellant had not chosen to furnish the material documents to show that the same is in any way unreliable. In that view of the matter, it is clear that the appellants had failed to account for the goods in question which is a most important circumstance to prove the clandestine removal of the goods. 52. It was contended before us that there was no evidence produced by the department to prove that there was clandestine removal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other documents are to be evaluated and necessary inferences are to be drawn from these facts as otherwise it would be impossible to prove everything in a direct way. The conduct of the appellant, the attending circumstances and other material factors as already discussed by us clearly go to show that the appellant has not discharged the burden and, therefore, the only conclusion is that the non-duty paid goods were not proved to have been used in the manufacture of further excisable goods. Therefore, the appellants have not proved that the goods taken from Bombay factory were used in the manufacture of further excisable goods. In such circumstances, the argument of the learned Consultant Shri Kampani that the whole case was built up by the department on assumptions and presumptions cannot be accepted by us. 55. It was contended before us by the learned Consultant, Shri Kampani that under Rule 173PP of the Central Excise Rules as was applicable at the relevant time, the appellant Company was entitled for the grouping up of the excisable goods comprised in Item No. 68 of the First Schedule to the Act, into such categories having regard to the number and nature of such goods manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand they are liable to pay the duty on such goods. It is, therefore, clear that the burden squarely lies on the appellants to satisfy the officers in this behalf. Then in that case, they are liable to pay the duty on demand by the Department. 58. In this case, there is nothing to show that the goods were destroyed by natural cause or by unavoidable accident, as contemplated under Rule 196 of the Rules. It is now a well-settled law that it is for the appellant who claims exemption, to establish that they are entitled to the same. 59. The learned SDR, Shri Dutt Majumder had relied on the decision of the Supreme Court in the case of C.I.T. v. Ramkrishna Deo reported in 1959 (35) ITR 312 which was also relied on by the Adjudicating Authority. In that decision, the Honourable Supreme Court held as follows : "At the very outset, we should dissent from the view expressed by the learned Judges that the burden is on the Department to prove that the income sought to be taxed is not agricultural income. The law is well-settled that it is for a person who claims exemption to establish it, and there is no reason why it should be otherwise where exemption claimed is under the Income Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble goods. The learned Counsel stated that the appellant has shown this by production of proper records. In fact, the records are not properly maintained at all. So also, no permission, as required under Rule 173PP(2) of the Central Excise Rules was obtained by the appellant for grouping up of the excisable goods comprised in Item No. 68 into such categories, having regard to the number and nature of such goods manufactured by them. 63. It was further contended by the learned Consultant Shri Kampani that instead of adjusting the shortages against the excesses a show cause notice for shortage had been issued by the Central Excise authorities in Calcutta whereas, for excesses, the show cause notice has been issued by the excise authorities of Bombay. He, therefore, contended that this is against all principles of justice and propriety. But with respect to this argument, it is seen that as far as shortages of the goods noticed in the factories which are within the jurisdiction of Calcutta Collectorate, the Collector of Central Excise, Calcutta had issued the show cause notice. If the case of the appellant is that the shortages noticed in the factories within the jurisdiction of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and, therefore, in terms of Rules 192 and 196 of the Central Excise Rules, they are liable to pay duty on those goods which are not shown to have been used for the manufacture of the further excisable goods. 65. It is also noticed from the records that appellant had removed non-duty-paid G.P. 2 goods as such on payment of Central Excise duty from their Calcutta Works in some cases. If actually they had discharged their liability as soon as the goods are transferred from their factories in Bombay, they would not have paid duty on such non-duty paid goods removed as such from their Calcutta Works. This only goes to show that even at the time of removal they were well aware of the above position indicated as above. 66. It is also seen from the Annexure 'H' to the Show Cause Notice that "several illustrations" which were not exhaustive were given in the show cause notice to the effect that the appellant has resorted to surreptitious removal of non-duty paid G.P. 2 goods without payment of Central Excise duty. In fact, the employee of the appellant Shri S.K. Das has given a statement wherein he admitted about this fact of removal of non-duty paid goods without payment of Central Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that the goods covered by the above challans actually related to pre-excise goods. In the absence of any evidence it cannot be accepted that the goods actually were from the pre-excise stock. 70. It was also noticed during the course of hearing that regarding the challan No. CW/654088 dated 24-8-1975 against Sl. No. 4 and 13 of Annexure 'H', the appellant company failed to give any explanation excepting that against Sl. No. 4 and 13 same challan Number was mentioned and that the goods covered by the said challan pertained to pre-excise stocks. The contention of the appellants cannot be sustained inasmuch as they failed to adduce any evidence that the goods covered by the said challan were from pre-excise stock. 71. As regards Challan No. CW/61151 dated 20-1-1986 against Sl. No. 7 of Annexure 'H', the appellants contended that the goods were not manufactured by them, but were procured from sub-suppliers and, therefore, are not part of G.P. 2 materials. On examination it is found that most of the goods covered by the said challan were manufactured by the said company. Only a few items like ammeter, voltmeter shown therein were not made by them, but fuse, bimetal relays etc. were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de Notice No. III/GL-53/75 dated 25-6-1975. It is also clear from the adjudication order that this failure was admitted by their Works Manager Shri A.K. Ray and Shri C.N. Gurbaxani, their Tax Manager, on 28-3-1984 before the Adjudicating Officer in the course of hearing. These admissions were also not specifically challenged. It is thus clear that they have suppressed the fact of receiving materials in a good number of cases. A list of such instances were mentioned in the show cause notice at Annexure E and these allegations were not explained convincingly by the appellant. With respect to the "receipt in full", certificates which were given by the appellants Calcutta Works in respect of non-duty paid goods received in G.P. 2s were also dealt with by the adjudicating authority. It is clear that the recipient factories of the appellants were clearly directed that the discrepancies in the G.P. 2 goods were strictly to be settled through formal letters and the discrepancies were to be settled among the different manufacturing units of the said company and that in any case Central Excise department would not be brought into picture in respect of G.P. 2 goods which may lead to serious c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led finally on 10-12-1982 and the authorised representatives of the appellants signed on the same in token of the correctness of such compilations made by the Central Excise Officers. Such final compilations were taken into account and the show cause notices issued by the Bombay Collectorate were required to be modified in accordance with the final compilations made by the appellants and on the basis of their records, submitted by them. The Bombay Collectorate was requested to modify their show cause notices with respect to the excesses. It is thus clear that for ascertaining both the excesses and shortages one procedure was followed and the compilations made by the Officers were accepted to be correct by the representatives of the appellant company, and this contention, therefore, should fail. 78. Further, in determining the value of the goods wherein shortage was noticed, the ex-factory prices after deducting the Central Excise duty were taken into account. Such ex-factory prices were supplied by the appellants and the value of the shortages were also compiled by the representatives of the appellants. It is also clear from the adjudication order that the appellants did not submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to prove the same, the only conclusion was that there was surreptitious removal. There cannot be any direct evidence in such cases and the same has to be inferred from the facts available in a particular case. If the goods were removed from the Bombay factories for the 'intended use' as per Notification No. 118/75-C.E., dated 30-4-1975, then it means that the goods are to be actually used in the manufacture of other excisable goods. Therefore, if the non-duty paid goods from Bombay factories to Calcutta Works of the same manufacturers M/s. Siemens Ltd., were not actually used in the manufacture of other excisable goods and when they could not be accounted for, the appellants are liable to pay duty and it cannot be said that the demand is barred by limitation. Therefore, this argument also cannot be accepted. It is now seen that when the appellant Company had not maintained the statutory records and when they had not properly and adequately explained the discrepancies, the onus rested on the appellant Company to substantiate that non-duty paid goods are used in the manufacture of excisable goods in their Calcutta Works. Since they have not discharged this burden, the only conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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