Decided on November 18,1991

S.S. Jain And Co. Appellant


S.KALYANAM,MEMBER - (1.) THIS is an application for waiver of pre -deposit of duty of Rs. 2,80,117.08 and a total penalty of Rs. 72,000 on the petitioner under the impugned order of the Collector of Central Excise, Madras, dated 28.6.1991.
(2.) SHRI Chidambaram, the learned Consultant for the petitioner, submitted that duty has been levied for the period 5.10.1979 to 20.6.1981 by issue of a show cause notice dated 7.1.1982 by invoking the longer period of limitation in terms of proviso to Section 11A of the Central Excises and Salt Act, 1944 inter alia alleging that the petitioner manufactured and cleared branded and non -branded bins without payment of duty. It was submitted that reliance has been mainly placed in the impugned order on the statement of one Khaleelkhan, who was functioning as Commission Agent -cum -supervisor, and statement of Shri Khaleelkhan would prima facie show that he was an independent manufacturer and in addition to that his own brother Rawoofkhan was a manufacturer of biris. The learned Consultant further submitted that in respect of the total quantity of biris sent through Punjab National Bank and received at the petitioners' head office at Delhi, payments for the entire value have been made to the said Khaleelkhan, which factor would only indicate that the petitioner was not prima facie the manufacturer. The learned Consultant further referred us to the various terms of the contract dated 8.4.1978 between the petitioner and the said Khaleelkhan. He further urged that the plea of suppression is not prima facie sustainable in law when the goods arc under physical control and placed reliance in this regard on the rulings of the Tribunal in the case of Leather Chemicals and Industries Ltd. v. Collector of Central Excise 1984 ECR 864 (Cegat SB -C) and in the cases of Premier Matches v. Collector of Customs (Tribunal) L.M.L Ltd. v. Collector of Central Excise . He further urged that the show cause notice docs not specifically indicate the quantum of duty with the result it is not in conformity with the statutory requirement in terms of Section 11A of the Act and in this context placed reliance on the ruling of the Supreme Court reported in 1988 (17) ECR 1 (SC) : ECR C 1281 SC and Karnataka High Court in . Finally he urged that the partnership firm is not in existence and the firm was dissolved way back in 1987 and the erstwhile partners arc not dealing in biris.
(3.) SHRI Vedantham, the learned DR, repelling the contentions of the learned Consultant for the petitioner, submitted that the submissions in regard to physical control have been dealt with in page 11 of the impugned order and adopted the reasoning given therein. He further submitted that the petitioner never pleaded any prejudice on the ground that the quantum had not been specifically mentioned and this plea also is not factually correct. The learned DR referred to para 9 of the show cause notice and urged that the quantum despatched through Punjab National Bank from Vellore, which formed the basis of demand, was in the invoice of the petitioner's company and if really the petitioner was not the manufacturer, prima facie there is no need for despatch of the biris under the bill of the petitioner company. We have carefully considered the submissions made before us. We have gone through the statement recorded from Shri Khalcclkhan and, as rightly pointed out by the learned DR, the quantum is based on the basis of what has been despatched by the petitioner company through Punjab National Bank to their head office at Delhi and it would be relevant to note that the despatch had been in the petitioner company's bill viz. S.S. Jain and Co. To a specific query in this regard as to why the goods should have been despatched under the petitioner company's bill if the petitioner was not the manufacturer, the learned Consultant was not able to give us any satisfactory answer. The plea of the learned Consultant that by reason of physical control suppression cannot be alleged is not acceptable, because a reading of Section 11A would clearly bear out that if the Department had no knowledge about the clearance of goods without payment of duty suppression is attributable and prima facie in the facts and circumstances of this case there is nothing on record to suggest that the Department knew or had knowledge about the manufacture and clearance of the quantum of biris involved without payment of duty by the petitioner. The plea in regard to the absence of quantum in the show cause notice also prima facie does not have any force and this aspect of the matter has also been clearly dealt with in the impugned order and we do not find any infirmity in the reasoning of the adjudicating authority in this regard. We would like to note that the ratio of the rulings relied upon by the learned Consultant are clearly distinguishable from the facts of this case and the rulings in regard to physical control also have been dealt with in detail in the impugned order by the learned adjudicating authority. So far as the quantum of biris is concerned the show cause notice clearly put the petitioner on notice of the same and the petitioner has also, as rightly contended by the learned DR, at no point of time pleaded prejudice nor do we find any prejudice caused to the petitioner in this regard as well on prima facie grounds. It is not the case of the petitioner that the duty worked out on the basis of the quantum alleged is incorrect in law.;

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