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TMI Blog1998 (3) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... 1987-88, apart from a penalty of Rs. 50,000/-. In Appeal No. E/4171/92-NB the penalty of Rs. 20,000/- imposed on Shri M.C. Bhardwaj, Director is under challenge. 3. The appellants are engaged in the manufacture of plastic coated textile fabrics falling under Tariff Heading No. 5903.19. On the basis of investigations made by the Assistant Director, Investigation, Income Tax Department, Faridabad and on scrutiny of the documents supplied by the Income Tax Authorities to the Central Excise Department, the Collector of Central Excise, New Delhi issued show cause notices alleging evasion of excise duty by appellants by removing plastic coated textile fabrics apart from raising various demands relating to the various periods. They were also called upon to show cause why penalty should not be imposed on them for contravention of Rule 9(2) read with Rule 173Q. The extended period of limitation under proviso to Section 11A(1) was also invoked. 4. On behalf of the appellant firm, Shri G.L. Rawal appeared before us. The Department was represented by Shri P.K. Jain, SDR. None appeared for Shri M.C. Bhardwaj in Appeal No. E/4171/92-NB. 5. Shri G.L. Rawal submitted that the present proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the receipt of grey cloth from M/s. Rupee Textiles. 8. The Department had also alleged that M/s. A.K. Dutt and Co. had supplied pigments and colours to the appellants during the period 21-4-1988 and 5-5-1988. Only evidence relied on was a letter dated 30-1-1990. According to the Ld. Advocate there was no dispute about the receipt of the item No. 1 and 3 mentioned in the letter. The dispute related to one entry viz., entry No. 2. He submitted that the show cause notice has selectively made use of entries contained in letter dated 30-1-1990 and has omitted certain entries. 9. A further charge against the appellants was that M/s. Kolson India had supplied chemicals to the appellants during the period 10-2-1988 to 13-6-1988 and reliance was placed on the statement given by Shri P. Satish. In his statement dated 15-9-1989, Shri Kohli had denied the supply of any quantity during the period 1987 to 1989 and especially during the period January, 1988 to June, 1988, which was the subject matter of the SCN. In his cross examination of Shri Kohli, had stated that he did not know Shri M.C. Bhardwaj, Director of the appellant company. In his statement dated 24-1-1990 Shri Kohli ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SDR submitted that for manufacturing plastic coated textile fabrics, principal raw material is grey cloth. The appellants had failed to account for several meters of grey cloth and the chemicals purchased by them in Form-IV register which is required to be maintained under Rule 173D, even though they had made purchases against cash payment and against challans and bills, copies of which have been listed in the Annexures C and D to the SCN. Further, no account of finished products were also found in the RG-1 register of the appellants, nor were any GP-1s issued for the clearance of the said goods. On receipt of certain bills and challans handed over by the Income Tax Authorities, statements were recorded from various suppliers of grey cloth. On the basis of statements given by various suppliers, the Department had issued the SCNs. Apart from the statements of various suppliers, the statement of Shri M.C. Bhardwaj, Director of the appellant firm as well as the statement of Shri V.K. Jain, its Additional Director was also recorded who had admitted to the production and clandestine removal of goods without payment of duty as well as about non-maintenance of statutory records and non-ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny cloth from M/s. Ambika Textiles. The basis of allegation of purchase of the said cloth from M/s. Ambika Textiles was the statement given by Shri I.K. Agarwal of M/s. Ambika Textiles. Since no cross examination of Shri Agarwal was allowed in the initial adjudication proceedings, the matter was referred to the Assistant Commissioner, Income Tax, for the purpose of allowing cross examination of Shri Agarwal. However, Shri Agarwal did not appear before the Assistant Commissioner. The Assistant Commissioner, however, held against the appellants. In his order, the Assistant Commissioner made addition of an amount of Rs. 18,89,820/- in computing the present appellants income for the relevant period. It was argued before the CIT(A) that the fresh order passed by the Assistant Commissioner, having been made without conducting cross examination of Shri Agarwal, was in utter disregard of the order of CIT(A) directing him to do so. Further, it was also urged that no computation of income of the appellants could be made on the basis of bills prepared by a third party. On this, the CIT(A) recorded the following findings :- In the original assessment order, ld. AO made addition for alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill be evident from the above extract of the order CIT(A) that the CIT(A) had found that there was no sufficient material to support addition of Rs. 18,89,820/- for assessing the income of M/s. Shivam Leatherite (P) Ltd. for the assessment year 1989-90. However, we find that the CIT(A) has not set aside the original assessment order of the A.O. computing the total income at Rs. 39,15,080/-. 17. On the other hand, we find that the impugned order before us has placed reliance on the statement of Shri Vijay Jain, Additional Director of the appellant firm who had in his statements dated 16-5-1989, 25-8-1989 and 18-9-1989 admitted that the appellants had purchased grey cloth and that they had not made any entry in their Form-IV Register. Shri Jain had also confirmed the receipt of chemicals for the manufacture of plastic coated textile fabrics. He had also confirmed by his statement dated 18-9-1989, the details given by Shri I.K. Agarwal regarding receipt of grey cloth from M/s. Ambika Textiles. The statements of M.C. Bhardwaj, Director of the appellant firm dated 2-3-1989 and 8-5-1989 have also admitted to the purchase of grey cloth and its hypothetication to the bank. These statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the quantity of plastic coated textiles fabrics was removed clandestinely without accountal in RG-1 register and without issue of Central Excise Gate Passes from the factory premises of the appellants. He had also admitted that these were sold to various buyers against cash payment. 19. We note that all the above mentioned statements had been written in English in the hand of Shri V.K. Jain. During the cross examination of Shri Jain on 6-2-1990, Shri Jain stated that during the relevant period he used to visit the factory once or twice in a week for posting work and for making monthly excise returns and he was not at all concerned with the actual production or receipt of raw materials. He had stated during the cross examination that On being repeatedly asked to report before the Central Excise Officers and out of utter frustration, I requested them to dictate which they felt like as I do not have any liabilities at the relevant time in company affairs. Besides, being a professional, I was to look after my day to day work also. Hence to save my time and energy and to cater to my professional requirements, I rejoin to write according to the wishes of the Central Excise Office ..... X X X X Extracts X X X X X X X X Extracts X X X X
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