T.P. Nambiar, Member (J) -
(1.) THIS is an appeal filed by the appellants against the order passed by the Additional Collector of Central Excise, Patna in Order No. 62-MP/84 dated 30-12-1984. In terms of that order the seized goods were confiscated and since they were released in favour of the appellants, a sum of Rs. 45,000.00 deposited to the Department as a Security Deposit for the provisional release of the goods in question had been appropriated towards the Redemption Fine. A penalty of Rs. 45,000.00 was imposed on Shri Chandulal Shah, Director of M/s. Bihar Extrusion Co. under Rule 173Q of the Central Excise Rules, 1944. It was also ordered that the appellants should pay an amount of duty of Rs. 85,847.80 under Rule 9(2) of the Central Excise Rules, 1944. The brief facts of the case are that the appellants manufacture Aluminium Sections falling under Tariff Item 27, out of Aluminium Ingots and Scraps. They purchase Aluminium Ingots from outside and take credit of duty paid on such ingots under Rule 56A of the Central Excise Rules, 1944. The billets are manufactured in their furnace at billet casting section of the factory and the billets are used as raw materials in the manufacture of Aluminium Sections. On receipt of information that the appellants had received one truck load of Aluminium Ingots without any documents through M/s. Bharat Transport Agency, the Central Excise Officers headed by the Assistant Collector, Central Excise, Jamshedpur paid a surprise visit to the factory premises on 17-8-1983. On scrutiny of R.G. 23 Part I it was found that stock of aluminium ingots as on 12-8-1983 was nil. Further from 12-8-1983 no further entry was made in the register. Again on checking the Form IV register of M/s. Bihar Extrusion Co., the appellants, the stock of billets was nil as on 12-8-1983. But on physical verification it was found that 4,800 kgs. of aluminium ingots and 8462.800 kgs. of billets were found in the factory store. The Director and the Chief Executive and other personnel of the appellants' firm stated that no consignment of Aluminium ingots was received on 16-8-1983. Hence, the stock of Aluminium ingots and billets were seized on 17-8-1983. It was also the case of the Department that on specific enquiry into charging of aluminium ingots and scraps in their furnace from 13-8-1983 to 17-8-1983, it was learnt that 2156 kgs. of ingots were received from M/s. Dilip Metal Industries, Jamshedpur and only scraps were charged on 16-8-1983 and 17-8-1983. No duty paid document for even 2156 kgs. of Aluminium ingots could be produced and only one challan No. 487 from consignment agent of M/s. Hindalco addressed to M/s. Dilip Metal Industries, Adilyapur, Jamshedpur was produced for the receipt of the same on 17-8-1983. There was no entry of this consignment in the Central Excise records. On further investigation of scraps, billets and the goods in process as on 17-8-1983, a stock of 2108.100 kgs. was found unsupported by any Central Excise records. Hence the same were also seized on 18-8-1983. Further it transpired that the appellants received 10.3 MT (in 507 pcs.) of Aluminium ingots on 15-8-1983 from M/s. Bengal Aluminium Stores (P) Ltd., Calcutta vide Billy No. BTA/X-5867 dated 14-8-1983 through M/s. Bharat Transport Agency, Calcutta as per factory's acknowledgement on 15-8-1983 on the Driver's copy of the Bilty. The receipt of 10.3 MT. Aluminium ingots was further corroborated by Shri B. K. Dutta of stores department. Further, one more consignment of 11.130 MT of Aluminium ingots (in 507 pcs.) was received by them on 16-8-1983 as corroborated by the weighment certificate No. 8643 dated 16-8-1983 of M/s. Jamshedpur Asbestos Mfg. Co.'s Adityapur Weigh Bridge, where the consignment was weighed. They appear to have received this consignment from some unknown source (s), using the same truck under cover of the same billy under which the consignment of 10.3 MT of Aluminium ingots was received by them on 15-8-1983 after making correction and manipulations in the relevant documents which are evident from over-writings, corrections etc. on different documents such as their Calcutta Head Office challan, certificate of Transport bearing SI. No. 263/83 of their Calcutta Office etc.
(2.) Neither the consignment of 2.156 MT (101 pcs.) of aluminium ingots from M/s. Dilip Metal Industries, Jamshedpur on 17-8-1983, nor the two consignments of 10.3 MT and 11.130 MT received on 15-8-1983 and 16-8-1983 respectively were accounted for in any Central Excise records nor any intimation was filed before the proper Central Excise Officer. Out of 23.586 MT, a total of 15.370 MT valued at Rs. 2,35,174.77 of Aluminium ingots, billets and scraps as detailed below were seized on 17-8-83 and 18-8-83.
The remaining 8.2151 M.T. appeared to have been rolled into sections and surreptitiously removed without payment of duty without any record including covering gate passes. A show cause notice was issued by the Assistant Collector, Central Excise, Jamshedpur vide C. No. V(27)(15)Seiz/1012/83/414, dated 14-2-1984 for contravention of Rule 9(1) read with Rules 173G, 53 read with 173G, 173G(4), 173F, 173F(1), 56A read with 173K, 226 and 198 of the Central Excise Rules, 1944 calling upon the appellants to show cause to the Additional Collector, Central Excise, Patna as to why penalty should not be imposed on them under Rules 173Q, 9(2), 56A(4), 226 and 198 of the Central Excise Rules, 1944 and the subject goods should not be confiscated under Rules 173Q, 56A(4) and 226 and duty amounting to Rs. 85,847.80 should not be recovered in terms of Rule 9(2) ibid. The appellants replied to the show cause notice and adjudication proceedings were done. The same resulted in the impugned order. The learned Advocate, Shri K. P. Chowdhury appearing for the appellants contended that the imposition of penalty on the Director of the Company is illegal. He also contended that without any specific proof that the appellants had removed surreptitiously the aluminium goods weighing 8215.01 Kgs. the demand of Rs. 85,847.80 is not in accordance with law. It was also his contention that such a demand cannot be raised on mere presumption and assumption. It was his contention that suspicion however strong cannot take the place of proof. It was his contention that the licence is granted in the name of the appellants' Company and the Company is accountable to the Central Excise Department and therefore, the imposition of penalty of Rs. 45,000.00 on its Director, Shri C. Shah is contrary to law. He also contended that no evidence has been adduced regarding the source wherefrom the ingots were obtained as alleged. He also contended that there is no basis for the Additional Collector to come to the conclusion that 10.3 MT of ingots were physically received in the factory on 15-8-1983. He also contended that 15th August being Independence Day no such ingot can be received by the appellants. It was also contended that 11.130 MT of aluminium ingots was received on 16-8-1983. A consignment of 2.156 MT containing the aluminium ingots in question was received on 17-8-1983. Merely because the same was not entered in Raw Material Account of 17-8-1983, it will not lead to the conclusion that the entries were not made with an intent to avoid the payment of duty. He also contended that the appellants had not to avail of the proforma credit in respect of duty paid ingots. Therefore, it was not necessary to make entry in R.G. 23 Part I and Part II. He also contended that there is no provision of law warranting the entry of such material on their receipts forthwith. It was, therefore, contended that if the duty paid raw materials received on 16-8-1983 and 17-8-1983 could not be entered on 17-8-1983 in the Raw Material Account this does not lead to contravention of any provision of law. He also contended that the seizure and confiscation of 15.370 MT of Aluminium Ingots, Billets and Scraps were invalid on the ground that out of this quantity 13.286 MT of ingots were received on 16-8-1983 and 17-8-1983 and out of which 8.386 MT of ingots were charged for production on 16-8-1983 and 17-8-1983 and the rest quantity was scrap i.e. recycling material arising out of raw-material under Rule 56A. In support of his contention he relied on the following decisions :
(i) 1986 (26) ELT 451 (Tribunal)
(ii) 1987 (32) ELT 430 (Tribunal)
(iii) 1988 (38) ELT 636 (Tribunal)
(iv) 1988 (33) ELT 580 (Tribunal)
(v) 1987 (28) ELT 315 (Tribunal)
(vi) 1988 (38) ELT 264 (Tribunal)
The learned J.D.R., Shri A. Chowdhury contended that the Director of the factory, Shri C. Shah and the Chief Executive of the factory apparently stated before the authorities that either on 16th or 17th August no ingots were received. He also contended that the records of receipt of aluminium ingots and manufacture of billets from 12-8-1983 onwards also show nil balance. Shri Chowdhury pointed out that on physical verification stock of 4800 kgs. of aluminium ingots and 8462.800 kgs. of aluminium billets were found in the premises of the factory. Therefore, he contended that the seizure was-legal. It was also contended that later on the appellants came with a theory that they received one consignment of aluminium ingots bearing the number 507 pieces weighing 11.130 MT from M/s. Bengal Aluminium Stores (P) Ltd., Calcutta on 15-8-1983 and a quantity of 2.156 MT of aluminium ingots (in 101 pcs.) was received from M/s. Dilip Metal Industries, Jamshedpur on 17-8-1983. He also contended that as per Report dated 16-8-1983 of the Billet Casting Section of the Factory it is seen that though there was no stock of aluminium ingot in the factory till 9AM of 16-8-1983 yet ingots have been charged in the billet casting furnace in between 7 AM to 10.45 AM of that date. He, therefore, contended that since the consignment was received from M/s. Bengal Aluminium Stores (P) Ltd., Calcutta it could not have reached before 10 AM of 16-8-1983. It was contended that the weighment of the same was taken in the premises of M/s. Jamshedpur Asbestos Mfg. Co.'s Adityapur Weigh Bridge at 9 AM and from that place the consignment could not have reached the appellants' Company before one hour. He, therefore, contended that this consignment could not have reached the appellants' Company before 10 AM. It was contended that if there was no stock of aluminium ingot in the factory as per record, then the billets could not have been charged on 16th in between 7 AM to 10.45 AM. He also contended that since the quantity of seizure exceeded the quantity of receipt from M/s. Baratanalay and M/s. Dilip Metal Industries together, it is obvious that the appellants had received some other consignment without entering the same in their records. He also contended that the three consignments of ingots and scraps to the tune of (10.3 MT + 11.130 MT -I- 2.156 MT) 23.586 MT though received by the appellants, have not been accounted for in the Central Excise records and there is a missing quantity of 8.215 MT which have been cleared without payment of Central Excise duty to the tune of Rs. 85,847.80. It was, therefore, contended that in view of the clandestine operation made by the appellants and on the facts and circumstances of the case the impugned order is justifiable. He also drew our attention to several findings of the Additional Collector and justified the order.
(3.) IN view of the rival contentions the following issues arise for our determination :
(i) Whether the imposition of penalty of Rs. 45,000.00 on the Director, Shri Chandulal Shah is justifiable?
(ii) Whether the demand of duty to the extent of Rs. 85,847.80 is in accordance with law?
(iii) Whether the confiscation of the seized materials and the appropriation of the security amount of Rs. 45,000.00 as Redemption Fine is in accordance with law?;