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TMI Blog2010 (10) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the commission of the offence under the Act by direct evidence - An admission is the best evidence that an opposing party can rely upon, and though not conclusive, is decisive of the matter, unless successfully withdrawn or proved erroneous - Held that: the declaration filed before the authorities were full proof of suppression of fact, when all connected evidence proved realisation of higher MRP. Accordingly, the Excise authorities having discharged their burden of proof, the appellants had no right to call for cross-examination on flimsy plea Regarding penalty - Having noticed that both the appellants had pre-meditated design through the joint venture approach to undervalue the goods resulting in loss of Revenue and been intimately connected with such loss causing evasion of Revenue, levy of penalty on both of them was justified - Appeals are dismissed - E/153-154/1988 - 749-750/2010-EX(PB) - Dated:- 27-10-2010 - S/Shri D.N. Panda, Rakesh Kumar, JJ. REPRESENTED BY : S/Shri L.P. Asthana, Ms. Nisha Bagchi, Abhishek Jaja, Ms. Shuchi Kakkar Ms. Sujata, Advocates, for the Appellant. S/Shri Mohan Parasaran, ASG with Gaurav Dhingra, Advocates, for the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Rules, 1944 and evaded excise duty of Rs. 43,25,130/- for which they both were held to be jointly liable under Excise Law. According to Revenue, such evasion was made wilfully and by misstatement and suppression of material facts as well as by misdeclaration of the adjusted sale price in relation to manufacture of Panama brand cigarette of the respective description for which protection of revenue was warranted. So also there were materials before the Investigating Authority to allege that the sale price of cigarettes realised over and above the MRP had flown to GTC. 3.1 It was also noticed by investigation that deceptively similar brands of Panama Cigarettes were manufactured by the NETCO and adopting dubious method of embossing sale price on cigarette packets without being printed caused loss of Revenue through a premeditated scheme of marketing designed by GTC to satisfy their ill-will. Sale price over and above the price mentioned on the price list submitted to Department for the impugned period was collected by GTC from buyers through its conduits and that had flown to GTC. Adjusted sale price with reference to the respective notification were distorted. Althoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Such design was aimed to collect excess sale price than the price embossed on the cigarette packets and lower amount of duty was paid on the embossed price resulting in evasion. Bank drafts were made by certain persons in fictitious names for remittance thereof to GTC deducting expenses incurred. 4.1 Investigation recorded statement from different persons connected with the trade and recovered documentary evidence from various quarters during search demonstrating aforesaid ill-design and the evidence so gathered were made known to the Appellants through the Show Cause Notices (SCN) on following allegations calling for their reply of appellants : (a) NETCO manufactured Panama Virginia cigarettes of GTC brand on job charges for GTC marking maximum price on packets for retail sale as per GTC s instructions. (b) NETCO availed benefit of exemption under Notifn. Nos. 211/83 -C.E., dt. 4-8-83 and 100/85 -C.E., dt. 25-3-85, as amended, and paid duty at specific slab rate applicable to the adjusted sale prices based on the market price. (c) NETCO manufactured GTC s Panama Virginia and embossed retail price of 20 s packets as Rs. 1.60 - Rs. 1.80 whereas the deceptively ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny bills/memos and deposited the sale receipts with the distributors. The margin occurring on account of charging higher price was used for payment of salary and other expenditure of GTC s salesmen. This expenditure was controlled by GTC by calling expenditure statement and vouchers from the distributors. (j) GTC s staff (Regional Managers etc.) controlled retail dealers who were not prepared to pay the extra amounts for passing on to the distributor. One such dealer was directed to accept only billed amount and leave the extra amount to be handed over to the distributor directly by the salesmen. (k) The marked prices were deliberately kept lower than the real sale price with the sole object of evading Central Excise Duty. The benefit of higher price was ploughed back, directly or indirectly, to GTC. (l) The minimum adjusted sale price should have been Rs. 2.50 and Rs. 2.60 per packet of 20s for the period 11-2-85 to 24-3-85 and 25-3-85 to 16-9-85 respectively and accordingly the duty evaded was Rs. 43,25,130/-. (m) NETCO who had undertaken the responsibility to pay proper duty as a manufacturer failed to ensure that declaration which formed the basis for assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty liability and extended period of limitation of 5 years was concerned? (5) Whether in the circumstances any penalty is impossible and on whom? 5.1 Issue number No. 1 was dealt by the learned Adjudicating authority in para 5.15.1 to para 5.15.13 at pages 74 to 87 of the order-in-original and second issue was dealt in para 5.16.1 to para 5.16.8 at pages 87 to 98 thereof. Third issue was dealt in paras 6.1 to 10.2 at pages 98-135 of O-I-O. Fourth issue was dealt in paras 11 to 11.6 at pages 135 to 140 of O-I-O. Issue 5 was dealt in paras 12 to 13 at pages 140 to 142 of O-I-O. All issues were decided against appellants holding both appellants were liable to duty evaded. Finding in adjudication on first issue : 6. While dealing with Issue No. 1 to find out whether the cigarettes were sold to consumers charging price higher than the MRP marked on the cigarette packets meant for retail sale if so what was the result thereof. Learned Adjudicating Authority noticed in para 5.15.1 at page 74 of the order-in-original that GTC sold the goods manufactured by NETCO through its distributors, appointing its salesman to operate between the distribution and retailers. They sold the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch party. Having sufficient material evidence before him as to realisation of the higher price and flowing back of such price to GTC, he came to the conclusion that the price realised by sale of cigarettes was basis to determine the adjusted sale price for applicability of rate of duty in stead of the embossed price on the packets to become basis of levy. Finding in adjudication on third and fourth issues : 8. So far as the issue Nos. 3 4 as to who is liable to pay the duty short-paid and whether the proceeding was time-barred, learned Authority dealt the same in para 6.1 to para 10.1 covered by pages 98 to 135 of the order-in-original. In para 6.8 of the order, ld. Authority considered defence plea that NETCO was not concerned with what was done by GTC and its gain were not taxable in the hands of NETCO. According to the Adjudicating Authority, discharge of duty liability was correlated with the role of the parties. A manufacturer who produced goods on his own account was responsible in that regard. But if he produces the goods on behalf of some other person his liability to pay duty cannot be separated from the liability of the main manufacturer i.e. the person on whose b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifth issue of penalty is concerned, the Authority examined that aspect in paras 12 13 of the order-in-original at pages 140 to 143 and held that the duty liability was both on GTC as manufacturer de-jura and on NETCO as de facto manufacturer, since the latter manufactured the cigarettes in question for and on behalf of the former and duty was not paid on the excess sale price realised over and above the marked price, both are liable to penalty because of their role to evade duty. Thus, penalty of rupees one lakh each was accordingly imposed on both of them. Consequences of adjudication : 10. On the light of the findings as discussed in paragraphs 5.15.1 to 12.2 of the order of adjudication, learned Adjudicating Authority held : (a) That differential duty of Rs. 43,25,130.00 (Rs. Forty-three lakhs twenty-five thousand and one hundred and thirty only) as per Annexure a to the show Cause Notice dated 24-2-1986 was confirmed and became payable by M/s. North East Tobacco Co. Ltd. (NETCO) under rule 9(2) of the Central Excise Rules, 1944 read with proviso to Section 11A of the Central Excise and Salt Act, 1944. (b) Penalty of Rs. 1,00,000/- (Rupees one lakh) each was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng countersigned by the recording officer. She also submitted that pages 94-95 shall not lend credence not being countersigned by the recording officer. She further referred to pages 98-99 and 100 to show that no-where the evidence recorded says that the GTC and NETCO were in picture. She took us to the issue in question submitting that the recorded statement may be exhibiting price of goods, without showing that those goods were either purchased from GTC or NETCO. This establishes that the statements so recorded do not give rise to any flow back. 11.4 She further submitted that the above referred pages showing statement recorded have no sanctity under the principles of evidence as well as law. This cannot be called as evidence under Section 14 of the Central Excise Act, 1944 to provide any basis for issue of show cause notice. Her principal grievance was that all that is referred under the aforesaid pages, are impeachable for no opportunity of cross-examination granted to the appellant in spite of their prayer before the authorities. 11.5 Mrs. Bagchi argued that the allegations made in the show cause notice was relying upon statement recorded under duress. She referred to pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examination would merely depose whatever they have already stated in their recorded statement. She drew attention to page 172 and submitted that the appellant requested for review of the decision of Revenue as to their version that they shall not enter into further correspondence with appellants on the subject as appearing at page 169. Referring to pages 174 and 175, she submitted that the authorities denied review of their decision. She draws attention to CWP No. 2036/86 available at page 183 to submit that the question of violation of natural justice was challenged by writ petition before Hon ble High Court of Delhi along with the question of jurisdiction. But such a stand of appellants was demolished by learned. ASG Shri Mohan Parasaran appearing for Revenue also submitted that the writ petition was dismissed as withdrawn. 11.8 Ld. Counsel for appellant drew attention to page 184 to say that the appellants were repetitively insisting to return back un-relied upon documents to the appellant. But Revenue did not allow such prayer. In the counter affidavit filed by Revenue in connection with CWP No. 2036/86, Mrs. Bagchi submitted that Revenue stated that appellant s prayer/reques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur attention to page 64 of the compilation filed by the appellant and submitted that such document cannot be considered under law being inadmissible in evidence for defects. She invited attention to page 81/278 to deal with 14 katcha slips recovered from Shri Vinod Kumar, which were considered by the Revenue in framing charge against appellant. Similarly she challenged contents of pages 68 to 72 of compilation, which pertains to Vinod Kumar. Her submission was that those documents are inadmissible in evidence for no cross-examination being allowed. Specifically she submitted that page 60 of the compilation does not per se establish charge against the appellant in respect of Panama Virginia. 11.12 Ld. Councel Ms. Nisha Bagchi appearing for appellants invited attention to pages 64-72 of the compilation filed in a separate folder by appellant and submitted that the same were relied upon by the Revenue to frame charges against the appellant. She filed an uncertified English translation copy of the Hindi version document appearing at pages 64-72 of the compilation and submitted that such documents cannot be basis for charge for following reasons : (1) Although there was a search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to be used against the appellant. 11.14 In the course of hearing, while examining pages 64-72 of compilation we noticed that similar figures like Rs. 39.30 relating to Panama cigarette appeared at page 65 of the compilation. It was also noticed that the figure 7 was written in that page which does not agree with the date appeared at page 64 but that figure agrees with some of the figures appearing under the signature subscribed. It was further noticed that similar figure like 901.02 appeared at pages 68 and 70 of the compilation. We have also noticed that page Nos. 68 and 70 carried same abbreviation like O.K. It was further noticed from page 72 that there was an abbreviation like ESP . All these practice of appellants questioned their intention. 11.15 While perusing the statement recorded from Mr. Vinod Kumar appearing at pages 73 to 76 of the compilation, we noticed that Mr. Vinod Kumar has specifically spelt out the relation between GTC and NETCO stating the same to be that of holding company and subsidiary company. We have found that in answer to question No. 13, as to the commission received from GTC, in his answer, he says I do not know . We have found from answ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Revenue s allegation that unaccounted money was released to GTC through sale of cigarettes was failed to be established by Revenue. 11.18 According to Mrs. Bagchi, at pages 78-80 of the order of adjudication, the allegation was that sales statement was sent to GTC. But that was without any proof of receipt of those statements by GTC or dispatch of those statements by dispatchers. She brought to our notice that page 14 to 21 of the compilation filed by the appellants show that those are relied by the Revenue to make allegation against the appellant without any basis. Those materials were not relevant and have no legs to stand against the appellant. Contents of such documents could not be established by Revenue. On an overall assessment of these documents including the statement of account referred to above as well as the bank counter foil, the learned adjudicating authority has come to an abrupt conclusion that there was flow back of funds from grass root level to GTC. But such allegation is without any evidence. She raised doubt about existence of all the three persons aforesaid submitting that Revenue could not demonstrate by any evidence about any dealing by them with GTC. Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to lead defence. He relied on the judgment of the Hon ble High Court of Allahabad in the case of Novamet Industries v. Union of India - 2008 (227) E.L.T. 363 (All.) = 2009 (13) S.T.R. 108 (All) for such submission. Thirdly he submitted that once it is held to be a case of flow back not being established, the appellants are squarely covered by the judgment of the Apex Court in the case of I.T.C. Ltd. v. CCE, New Delhi - 2004 (171) E.L.T. 433 (S.C.). His plank of argument was that a job worker is a manufacturer. For this, he relied on the Tribunal s decision in the case of ITC Ltd. v. CCE, Bangalore reported in 1998 (104) E.L.T. 151 (Tri.). He also submitted that while deciding the matter, Tribunal should take note of the judgment of the Apex Court in the case of Ujagar Prints v. UOI - 1988 (38) E.L.T. 535 (S.C.). His further submission was that who shall be a manufacturer is judicially noticed in the case of Empire Industries Ltd. Ors. v. Union of India Ors., reported in 1985 (20) E.L.T. 179 (S.C.) and relied on para 33 thereof. 11.21 So far as limitation is concerned, Shri Asthana, learned Counsel for appellant argued that GTC was in existence from 1955. NETCO came into e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Revenue by order dated 3-3-1997 passed by Tribunal. A copy of the order is available at page 113 of the paper book (R-I) filed by Revenue. He submitted that Tribunal gave various findings in respect of the issues involved in respect of adjudication relating to Bombay and Baroda factories of GTC including the issue relating to flow back. Such finding appears in para 14 at page 177 of the paper book. The order dated 3-3-1997 of Tribunal reached to finality because GTC lost Civil Appeals No. 5134-5135 of 1997 disposed on 12-9-1997. 12.3 Shri Parasaran learned ASG submitted that there was no violation of natural justice nor there was any retraction of statement recorded from different person which is patent from page 179 of the Paper Book. Various instances were noticed by the Tribunal to come to the conclusion that there was of flow back which appears in paras from 41 to para-57 of Tribunal s order dated 3-3-1997. Relying on para 59 of the Tribunal s order, Shri Parasaran submitted that Tribunal categorically held that GTC had job workers and they were manufacturers. Deceptively, similar regular brand of cigarettes were manufactured by GTC as well as through its job workers. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants to plead, since in that case such plea was discarded on similar facts and circumstances. Drawing attention to para 39 at page 172 of the Paper Book, Vol-I, the ld. ASG submitted that Tribunal s finding in Bombay/Baroda case was that GTC had declared lower maximum retail price and paid duty on such value while they collected higher amount by various means. Present appeal being of similar nature, GTC and NETCO are barred from raising further plea when they did not come out with clean hands. 12.7 The design of GTC in the case of Bombay/Baroda jurisdiction has established the case of evasion in view of appeal of GTC dismissed by Hon ble Supreme Court against the order of Tribunal as aforesaid. That reached to finality. Therefore the operation that was carried out by GTC in similar manner in the other parts of the country need to be dealt in the light of dismissal order of Apex Court in the case of GTC. He referred to the order of Hon ble Supreme Court passed on 12-9-97 in the case of GTC and submitted that when the civil appeals were dismissed by the Hon ble Court categorically stating that they did not find any merit in the appeals, it is established that GTC head off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the communication dated 24-3-09 produced by ld. ASG. According to Shri Asthana, when the proceedings were different, these documents produced by Revenue today do not come to their rescue. But such plea was repelled by Shri Parasaran on the ground that entire proceeding to different places arose out of common search and GTC has lost its credence by Tribunal s order dated 3-3-1997. 12.10 From the very beginning of the hearing, we were asking the appellant to produce the joint venture agreement if any between GTC and Assam Development Corporation. But they failed to produce the same. Also we were asking the appellant to produce the agreement between GTC and its job workers, GTC and Super Dealers. Nothing could be adduced by appellants except submitting copies of the following documents by appellants : 1. Trade mark certificate of GTC. 2. Licence issued to NETCO by Government of India. 3. Copy of counter affidavit filed by GTC before Supreme Court. 4. Copy of order passed in ITC s job workers case CCE, Delhi v. Assam Tobacco Co. Ltd. 5. Copy of the income-tax order passed in writ petition No. 707 of 1995 M/s. GTC v. Income Tax Appellate Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examination. This is also finding in the Tribunal s order passed in Bombay/Baroda jurisdiction and exhibited by para 36 thereof. For such purpose he invited attention to Page No. 172 of the paper book. He further submitted that in his evidence, Shri Vinod Kumar stated that extra sales considerations were flowing back to GTC. This is directly in reply of question No. 16 put to him. In this respect, page 114 of the paper book was referred to. The same witness also explained such fact in the course of search as per English translation to the Hindi version appearing at page 105 filed in the course of hearing. Along with the paper book, the documents separately filed showed relevancy of the chits seized in the course of search to the offence committed. Page-111 of the paper book proved that abbreviations were used to explain the manner of flow back. Relying on pages 33 to 35 of the paper book (R-2), ld. ASG submitted that these documents brought relationship between the wholesale dealer and GTC. According to him, credential evidence as above proved that there was flow back and extra money was realised in respect of sale of impugned goods and that was passed on by Shri Ghorawat to GTC at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was getting job charges of Rs. 3 per unit. Raw material was given by GTC and that was converted into finished goods by NETCO under exclusive control of GTC. It was admitted by both the parties that duty shall be borne by NETCO in respect of sale proceed worked out by GTC. In view of all these findings in relation to NETCO, ld. Adjudicating Authority in Para 10.2 at page 135 of order-in-original brought out the order of recovery of the duty liability that arose out of the transactions between GTC and NETCO through the pattern of flow back. The authority also held GTC is de jure manufacturer and the NETCO was de fecto manufacturer. 12.15 Shri Parasaran supported his argument drawing our attention to the instructions of Shri Sinha who was an employee of GTC and also referring to the contents of post-card written by Shri Goswami appeared at page 44 of paper book (R-2). He submitted that English version of the contents of the postcard can be seen from the compilation (A-5) filed by Revenue separately. Shri Sinha s details appeared at page 42 of (R-2). According to him, in view of all the evidence available on record, GTC cannot deny its liability even if NETCO is made liable by order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e promoted by Assam Industrial Development Corporatar (an undertaking of the Govt. of Assam) and GTC with 51% and 49% stake holding respectively by them. But both the appellants failed to produce the joint venture agreement and agreement between the Parties for our examination. Relationship between NETCO and GTC not only remained in dark before Adjudicating Authority but also remained in dark before us. This is patent from Para 5.5 of Order-in-Original at Page 65. The appellant suppressed their terms of understanding without adducing above evidence. Legality of search : 15. Legality of search was challenged by appellants under technicality of no signature on each page of Panchnama. Panchnama for the search was prepared by the officers of Excise Department in the presence of witnesses who attested the same along with the person against whom authorisation was issued or his authorised representative present. There was no complaint about illegality of search made by appellants forthwith or infirmity thereof was challenged before Court. The search and seizure operations were authorised by competent authority and competency of the Authority remained unchallenged. Pursuant to authoriz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by GTC were manufactured by NETCO without any quality difference. That was proved by Revenue though chemical examiner s report dated 17-9-1985 against sample dated 6-8-85 taken. That remained uncontroverted and proved the allegation of descriptively similar goods manufactured. 16.1 It is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom. It is also well settled that misrepresentation itself amounts to fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfully or recklessly causing him to believe and act on falsehood. Of course, innocent misrepresentation may give reason to claim relief against fraud. 16.2 An act of fraud on Revenue is the most solemn always viewed seriously. Fraud and collusion vitiate even proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct either by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. It has been held by Apex Court in the case of Commissioner of Customs, Kandla v. Essar Oil L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of S.P. Chengalavaraya Naidu v. Jagannath - AIR 1994 SC 853. It has been held by the Apex Court in the case of Ram Preeti Yadav v. UP Board of High School and Intermediate Education - AIR 2003 SC 4268 that no court in this land will allow a person to keep an advantage which he obtained by fraud. When the material evidence established fraud against Revenue white collar crimes committed under absolute secrecy shall not be exonerated from penal consequence of law following Apex Court judgment in the case of K. I. Pavunny v. AC, Cochin - 1997 (90) E.L.T. 241 (S.C.). It is cardinal principle of law which is enshrined in Section 17 of Limitation Act that fraud nullifies every thing, the adjudication was not time-barred following Apex Court judgment in the case of C.C. v. Candid Enterprise - 2001 (130) 404 (S.C.). When deliberate breach of law was made by appellants suppressing the value of adjusted sale price determinable with reference to MRP declared and nothing was demonstrated that the Authority below merely acted on imagination while the adjudication was based on cogent evidence, the plea of time-bar becomes unsustainable. Duty liability under law is bound to be fastened includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials recovered were neither under undue influence nor under duress. Mala fide of the appellants came to light and that established undue gain made by them at the cost of revenue. The materials recovered established exclusive control exercised by GTC in the marketing network over the cigarettes manufactured by NETCO and such materials could not be proved to be unworthy being consciously possessed not being alien to the trade. Nothing could be shown to us to prove that the appellants did not make any gain out of the transactions covered by the impugned materials recovered during investigation. The chain of evidence led by Revenue demonstrated that the materials were instrumental to make undue gain of excess sale price and versions of witnesses corroborated such gain. The gains so made were routed through conduits in the shape of bank drafts. The bank draft slips and chits recovered in the course of search were testimony of the oblique motive of appellants to realise sale price over and above MRP declared. Series of bank drafts were made in the name of fictitious persons to transmit the ill gain to GTC. Active role of GTC in such activities were well established by series of evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 thereof dealt the manner how the appellants violated norms of the Notifications and contravened the law causing evasion of duty. That clearly showed conduct of the appellants. There was no iota of evidence to discard the allegation of control of GTC over market network and realization of sale price over and above that was embossed on the cigarette packets by NETCO which was a Joint venture partner. Such realizations were unaccounted and channelised to GTC through its conduits. That was established by Revenue through series of evidence in Paras 5.15.1 to 5.15.4 at Pages 74 to 77 of the impugned order bringing out the methodlogy followed by GTC in this regard. The benefit of such higher sale price went to GTC as has been described by learned Adjudicating Authority in terms of Para 5.15.6 at Page 77 to Para 5.15.3 at Pages 86-87 of Order-in Original. Evidence led by appellants to discard such allegation in show cause proved to be unworthy due to probability of realization of higher price as has been argued by learned ASG. Although the appellant tried to assail the allegations in show cause notice filing certain statements of few retailers, they failed to produce them and demolished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lay of Revenue is established by the narrated facts in aforesaid paragraphs and by the findings recorded by Adjudication order through a reasoned and speaking order. Duty of adequate disclosure is also patent from the speaking order passed by learned Adjudicating Authority and also from terms of show cause notice. We are constrained to take note of the fact that it is on account of continuous unreasonable requests on the part of appellants, the Adjudicating Authority could not complete adjudication expeditiously. Evidentiary value of statement recorded : 20. Following the ratio laid down in the case Veera Ibrahim v. State of Maharashtra, AIR 1976 SC 1167 = 1983 (13) E.L.T. 1590 (S.C.), the statements of the witnesses recorded who were not formally accused of any offence were not being hit by Constitutional guarantee, were admissible in evidence when those were recorded under Section 14 of Central Excise Act, 1944 in the course of judicial proceeding. That unambiguously explained modus operandi of appellants without ruling out their association with the deposition. The versions in the statements directly related to the governance of the business of the appellants and such nexus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order was made on the ground that the same was based on the statements of witnesses which were not been subjected to test by way of cross-examination of the deponent. A statement recorded by Customs Officers under Section 108 of the Customs Act being admissible in evidence as held in CCE v. Duncan Agro Industries, reported in 2000 (120) E.L.T. 280 (S.C.), the court has to test whether the inculpating portions were made voluntarily or whether it is vitiated on account of any of the premises envisaged in Section 24 of the Evidence Act. Nothing could be demonstrated to impeach the statements recorded. 21.1 Though it cannot be denied that the right of cross-examination in any quasi-judicial proceeding is a valuable right given to the noticee as these proceedings may have adverse consequences, at the same time under certain circumstances, this right of cross-examination can be taken away. Hon ble High Court of Bombay while dealing with the similar issue in the case of Gyan Chand Sant Lal Jain v. UOI, reported in 2001 (136) E.L.T. 9 (Bom.) and taking into consideration the applicability of concept of principles of natural justice in that regard quoted para 76 of Halsbury s Law of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s like this, persons who had given information should be allowed to be cross-examined by the co-noticees on the statements made before the customs authorities. If cross-examination is to be allowed as a matter of right then in all cases of conspiracy and joint dealings between the co-noticees in the commission of the offences in connection with the contraband goods, they can bring about a situation of failure of natural justice by a joint strategic efforts such co-noticees by each one refusing to be cross-examined by resorting to Article 20(3) of the Constitution and simultaneously claiming cross-examination of the other co-noticees. It is not a matter of right for any assessee to contend that the statements of witnesses should be discarded. 21.3 Bearing in mind the law laid down by the Apex Court and prayer for cross-examination being premature without filing reply to SCN, there was no substance in the contention of the appellants about violation of principles of natural justice. Appellant s prayer for cross-examination was devoid of merit when ample evidence on record demonstrated dubious practice adopted by them causing loss of Revenue. The deponents by their versions corrobo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mary burden. 22.1 Realisation of sale price over and above the price marked on cigarette packets was without sanction of law. Secrecy and stealth being covering guards of ill designed act of appellants, it is normally hardship for Revenue to unravel every link of the process. However Revenue could successfully place cogent evidence to discard innocence of appellants proving their mala fide. Many facts relating to the ill design remained in the special or peculiar knowledge of the persons concerned in that. Adjudicating Authority simply did not adjudicate the matter on any sole consideration, but several considerations, governing facts and attendant circumstances were basis of the adjudication. Echoing evidence, series of factors and several circumstances were determinative. Conduct of the appellants also contributed for the conclusion of the learned Adjudicating Authority against the appellants. Standard of proof : 23. The standard of proof in a civil case is preponderance of probabilities. In a civil case there is no burden cast on any party similar to the one in a criminal proceeding. Following the ratio laid down in CIT v. Durga Prasad More, 82 ITR 540, 546-47 (S.C.) it ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stinguish the goods. In absence of any such basic evidence, Revenue s contention as to manufacture of deceptively similar goods cannot be ruled out. Accordingly, the appellants exposed themselves to the charge of manufacture of goods bearing brand names deceptively similar to their regular brand name, but identical in quality to the goods being sold under regular brand names, only with intention to evade the duty. There cannot be any other motive for such practice as no businessman selling the goods manufactured by them or got manufactured through a job worker, under his well established brand name will registered a new brand name very similar to the regular brand name only to sell identical goods under such similar brand name and that too at much lower price. This is against the normal bona fide business practice and is nothing but a strategy to hoodwink department for evasion of duty by mis-declaring the MRP with reference to which the rate of duty was to be determined. Citations made by parties : 25. Ld. Counsel for appellants relied on the judgment of GTC Industries Ltd. v. Union of India - 1991 (56) E.L.T. 29 (Bom.) in support of his argument for opportunity of cross-exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997 (96) E.L.T. 511 (S.C.) in support of his contention that the statements not being extracted under compulsion and remaining un-retracted shall be safely relied. We do agree that in all fairness a statement recorded fairly without any pressure or duress is admissible in evidence. 26.1 Sri Parasaran further relied on the decision of Apex Court in the case of M/s. Kanungo Co. v. Collector of Customs and Others - 1973 (2) SCC 438 = 1983 (13) E.L.T. 1486 (S.C.) to argue that the Excise authorities made out full proof case of evasion of duty and they have discharged the burden of proof for which no cross-examination was required. We have already stated that deceptively similar brand cigarettes were identical in quality with that of the cigarettes sold under regular brands and those were manufactured and marketed with such low MRP. That gave rise to adjudication. Such practice was proved by chemical examination report laid by Revenue and exposed to appellants through the SCN. The chemical examination report remains uncontroverted. Also his reliance was on the proposition that the witnesses who corroborated the case of Revenue should not be produced for examination when the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 478 to argue that the Courts can always see through corporate veil to ascertain the true nature of the company. Doctrine of lifting veil, piercing the veil, peeping or seeing through the veil is invoked when the corporate personality is found to be opposed to justice, convenience or interest of Revenue. We do agree with him that Courts come to rescue of Revenue where subterfuge to it is caused inside corporate veil. We have already stated that neither the joint venture agreement nor the understanding of job work agreements were produced before adjudicating authority, so also there was failure to produce before us. Revenue was entitled to bring the law into motion against the appellants when they failed to produce their joint venture agreement. We have noticed that GTC was controlling NETCO beginning from manufacture till marketing of the goods. Such finding alone was enough to hold that GTC had gained at the cost of Revenue controlling the MRP and realised sale proceeds over and above the MRP declared. Determination of liability : 28. We have gone through the decision of the Apex Court in the case of Empire Industries Ltd. - 1985 (20) E.L.T. 179 (S.C.) as well as the judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said observations and findings, we hold as under : (1) There were goods with deceptively similar brand manufactured by NETCO and the same was marketed by GTC by declaring MRP on the packets much lower than the MRP of the regular brands. The MRP on the packets of deceptively similar brand was embossed instead of being printed as per the mandate of the law. The embossed MRP was barely visible. (2) In respect of the above-mentioned deceptively similar brands , there was realisation of sale price over and above the declared MRP, embossed on the packets. (3) There was flow back of the funds arising out of realisation of higher sale price from the distributors to GTC. (4) There was deliberate misdeclaration of MRP with reference to which the rate of excise duty was to be determined and this had been done as part of well thought plan to evade duty. (5) The liability for duty shall be attributable to NETCO which was a job worker according to conception of both sides and longer limitation period under provision of Section 11A(1) of the Central Excise Act, 1944 would be available to the Department for demand of short-paid duty. (6) For contravention of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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