1. Being aggrieved with the confiscation of 39 packages of motor vehicle parts by enforcing the bond and appropriating an amount of Rs. 35,000/- in lieu of confiscation and also... the appellants have filed the present appeal.
2. Factual backdrop : It was the case of the Department that on 3-7-1985, the preventive officers concerned intercepted a motor tempo loaded with 26 wooden cases containing motor-vehicle parts at UP-Delhi border near Maharajpur check-post and on demand, Mohd. Kaleem Khan, Driver of the said vehicle produced two gate pass both dated 30-6-1985 and proforma invoices all dated 30-6-1985 and GR dated 30-6-1985 of M/s. Chawla Transporters, Ghaziabad and after interrogating the said driver and examining the record of the said transporter and also examining the record of the appellants' factory, whereby it was revealed that the said goods found loaded in the aforesaid tempo on 3-7-1985 had actually left the factory gate on 30-6-1985, the officer concerned seized the said 26 wooden cases containing motor vehicle parts on a reasonable belief that it was a case of double transportation of the goods without payment of Central Excise duty because similar goods were being transported on the gate passes which were of earlier dates. It was their further case that during the visit of the appellants' factory, the officer concerned also found 13 wooden cases containing motor vehicle parts manufactured by the factory, in duly packed and ready to despatch condition, lying in the factory premises under the shed known as Cycle Stand. The same were also seized on a reasonable belief that the appellants cleared the said 13 wooden cases also from their manufacturing goods. Statement of Shri Vinod Kohli, an authorised representative of the appellants' factory was recorded on 3-7-1985 itself wherein he is said to have failed to offer any accountal of these goods. As a follow up action, a show cause notice calling upon the appellants to show cause as to why the seized 39 packages containing motor vehicle parts be not confiscated and penalty be not imposed was issued to the appellants. The transporter and the Driver namely Shri Har Charan Singh Chawla and Mohd. Kaleem Khan, respectively were also issued show cuase notices to show cause as to why the penalty be not imposed and why the aforesaid tempo be not confiscated. The main defence of the appellants' company was that on 30-6-1985 the factory had prepared a daily despatch statement of the goods to be lifted from their factory by the aforesaid transporter namely M/s. Chawla Transporters and sent it to the said transporters.
Accordingly, the goods were loaded in three tempos of the said transporters and cleared from their factory. One of the tempos contained 39 packing cases after clearance had developed mechanical defect after leaving the factory and the said transporters finding that they could not repair the tempo immediately unloaded the goods and wanted to keep them at a safe place and for this purpose they approached the contractor of the cycle stand and asked him to allow them to store the said wooden cases namely the said 39 packages at the cycle stand and thereafter a part of these goods namely 26 cases was transported from the cycle stand by the transporter on 3-7-1985 and the remaining 13 packing cases were seized at the cycle stand on the same date which were cleared on 30-6-1985 and cited the case law to show that burden to prove in such cases lies on the department and no penalty was called for in the facts and circumstances of the case. The transporters and the Driver also contested the show cause notice.
However, the Additional Collector of Central Excise did not agree with the said defence of the appellants and consequently he imposed a personal penalty of Rs. 40,000/- upon the appellants under Rule 173-Q of the Central Excise Rules, 1944 and also ordered for the confiscation of the seized 39 packages of motor vehicle parts under the same Rule by enforcing the bond and appropriating the redemption fine of Rs. 35,000/- out of the security in lieu of confiscation. He also imposed certain personal penalties on Shri Har Charan Singh Chawla, partner of the said transporters and Shri Mohd. Kaleem Khan, driver and also confiscated the said tempo by appropriating certain amount out of the security in lieu of confiscation. Hence the present appeal by the appellants' company only.
3. Shri P.A.S. Rao, learned counsel for the appellants almost raised all those contentions before us which were urged and rejected by the Adjudicating Authority. To wit, the appellants have a huge building complex at Ghaziabad and its outer wall has only one entrance gate known as gate No. 1. Inside this gate, there is a building meant for security guards. Opposite to this building, there is sufficient spare for parking of cars belonging to both the officers of the Company and the private persons. Adjoining to this there is a cycle-cum-scooter stand. The factory employees as well as the public men keep their two-wheeler vehicles in this stand and that this stand is managed through an independent contractor. Behind the security staff building, there is a canteen in front of which there is a lawn. Then comes another boundry wall which leads to main entrance gate known as gate No. 2 and from this place factory area starts. In this are, all types of manufacturing processes are carried out and from this gate No. 2, packed excisable goods loaded in vehicles move out of the factory. As no manufacturing or storage activity of excisable goods is carried out in the area between gate No. 1 and gate No. 2, the said area cannot be categorised and defined as a factory under Section 2(e) of the Central Excises and Salt Act, 1944. That on 30-6-1985, the factory had prepared a daily despatch statement of the goods to be lifted from their factory of the appellants by M/s. Chawla Transporters and sent it to the said transporters. Accordingly, the goods were loaded in three tempos of Chawla Transporters and cleared from their factory. One of the tempos contained 39 packing cases. The said clearances are recorded in the outward movement register maintained at their security office. That the factory was not aware as to how these 13 packages were stored at the cycle stand and it is only on enquiries that the appellants factory was informed by the said Transporters that one of the Tempos in which the subject goods had been cleared on 30-6-1985 had developed mechanical defect after leaving the factory and since the transporters found that they could not repair the tempo immediately unloaded the goods at the cycle stand with the consent of the cont ractor of the cycle stand.
That a part of the subject goods namely 26 cases were apparently, thereafter transported from the cycle stand by the transporters on 3-7-1985 and as these 26 cases were to go to the Hyderabad and Madras, the transporter was taking them to Railway Station, New Delhi for booking by railway. Shri Rao at this stage emphasised that vide letter dated 25-9-1986 the appellants filed a statement showing the despatch details of 203 wooden cases to be moved to various destinations on 30-6-1985 to the said transporters and that except for the 39 cases seized on 3-7-1985, the balance 104 wooden cases moved through the said transporters on 30-6-1985. He further emphasised that before the issuance of the show cause notice the basic facts should have been first enquired and it should have been ascertained whether or not the seized goods had already suffered duty earlier or not. But this was not done by the Department. In a nutshell his contention was that the subject 39 packages were not removed without payment of duty or clandestinely nor it was a case of double removal on the said gate passes as held by the Adjudicating Authority and that the burden of proving clandestine removal lies on the department which the department has miserably failed to discharge. He emphasised that burden to prove is a shifting process and there are many cases in which the party on whom the burden of proof in the first instance lies, may shift the burden to the other side by proving facts giving rise to a presumption in his favour. In these premises he also urged that even in case any of the excisable goods has been found to have been removed in contravention of the Excise Rules, it won't be right for the Excise Authorities to order confiscation and imposition of fine unless they find that there is a mala fide intention on the part of the licensee.
In other words no penalty is imposable for technical or venial breach of legal provisions. To bolster these contentions, which in many places are overlapping, he mainly relied upon the following case law -Amber Bearing Manufacturing Co. (P) Ltd. v. Collector of Central Excise,Hindustan Steel Ltd. v. State of Orissa, (11) Shri Satpal Gondi v. Collector of Central Excise, 1983 ECR 1239.Stretchlon (P) Ltd. v. Collector of Customs, 1983 (13) ELT 1173 (Ccgat).Cement Marketing Co. of India v. Assistant Sales Tax Commissioner, AIR 4. In reply Miss. Renuka Mann, learned SDR supported the impugned order and referred the case law which was relied upon by the Additional Collector in his impugned order.
5. We have considered the submissions and the case law cited at the Bar and feel unable to agree with the learned Counsel for the appellants.
The Additional Collector by his carefully considered order which is impugned before us, clearly disagreed with the plea of the appellants that the goods were loaded in three tempos of Chawla Transporters on 30-6-1985 and removed from their factory and since one of the tempos containing the subject 39 wooden cases had developed mechanical defect after leaving the factory M/s. Chawla Transporters stored the goods at the cycle stand without factory's knowledge or approval and when 26 wooden cases out of these 39 wooden cases were been taken on 3-7-1985 to the Railway Station for booking the same were intercepted. The Additional Collector after carefully examining the factory's ground plan submitted by the appellants and approved by the authorities concerned on 6-4-1984 had recorded a specific finding that the cycle stand in question clearly falls within the inclusive definition of a factory under the Central Excise Law and any storage in or removal of excisable goods from cycle stand had to be accounted for and explain by the appellants. From the impugned order we also find that all the pleas which are advanced before us were taken before the Adjudicating Authority and he after appreciating the entire evidence on record and the attending circumstances rejected the same. On our careful consideration of the evidence on record and the arguments advanced before us we do not find any reason to disagree with the findings recorded by the Adjudicating Authority and since we are affirming his findings we need not require to repeat the same here. However, we would like to mention a few here - (i) Admittedly the goods were intercepted on 3-7-1985 and all the Central Excise documents covering the subject goods were of 30-6-1985 and there were no remark or endorsement on the gate passes accompanying the goods indicating that the transporting vehicle had broken down.
(ii) Had the subject goods could not be transported due to the break-down of carriers etc. and had to be brought into the factory, the appellants who is an established Central Excise Licensee should have followed the provisions of Rule 173H of Central Excise Rules, 1944 particularly with reference to Rule 1 (c) thereof. Failure to observe the provisions of the said rules betrays that the goods in question were not the duty paid goods returned to the factory.
(iii) On examination of the goods removal register (finished) maintained by the appellants it was found by the Adjudicating Authority that there was no movement of any particular vehicle. This omission also makes the defence of the appellants false.
(iv) On examination of GRs maintained by the said transporters M/s.
Chawla Transporters it was found by the Adjudicating Authority that the G.R. No. 5093 dated 30-6-1985 covering the subject goods was manipulated. He has observed that the said transporters earlier G.R. No. 5085 with regard to another factory (Messcrs Expanded Plastics) bears the dale of 1-7-1985 whereas the subsequent G.R. No. 5093 in question is of earlier dale of 30-6-1985.
(v) On examination of the appellant's Daily Despatch Statement dated 30-6-1985 in respect of the said transporter M/s. Chawla Transporters it was found by the Adjudicating Authority that the original of that statement did not tally with its carbon copy available in the factory. Ft was noticed that the carbon copy of the statement was with respect of 179 cases while the original statement covers only 141 cases. Some other inconsistencies were also noticed by the Adjudicating Authority. To wit, Shri Har Charan Singh Chawla in his statement recorded on 3-7-1985 also gave a note that the daily despatch statement received by the transporters was in respect of 141 cases. However, the appellant's letter dated 24/25-9-1986 showed that as many as 203 cases were to be moved to the various destinations on 30-6-1985 by the said transporters.
(vi) Contradictions and inconsistencies were also noticed by the Adjudicating Authority between the affidavit of Shri Ram Kumar Sharma, the Contractor for maintenance of the cycle stand dated 8-7-1985 and the statement of Shri Har Charan Singh Chawla dated 3-7-1985. In his affidavit, Shri Ram Kumar Sharma had averred that on 30-6-1985 Shri H.S. Chawla of the said Transporters contacted him at about 10 P.M. and informed him that one of his tempos went out of order. According to (his affidavit the said Shri H.S. Chawla requested the said Shri Ram Kumar Sharma for permission to unload 39 wooden cases in the cycle stand in Shri Sharma's custody. As against the contents of the said affidavit Shri H.S. Chawla in his statement dated 3-7-1985 mentions that he had learnt that some of the goods were left by his men at the cycle stand situated at the appellants factory because of some defect in one of their vehicles.
(vii) The appellants company had not explained at all as to why only 39 wooden cases were unloaded at the cycle stand on 30-6-1985 when according to the concerned gate passes the concerned vehicle No. 8788 was actually carrying 71 cases.
(viii) On examination the Adjudicating Authority had found that the copies of the challans recovered from the wooden cases were not signed by any of the officers of the appellants factory. Challan No. BZ-935 was not available in any of the wooden boxes bearing marks BZ-935. Further as per challan No. BZ-934 the wooden cases bearing BZ-934 should have been 5 in numbers whereas on physical verification only 4 wooden cases bearing the said number were found.
Similarly, as per challan No. BZ-933 dated 30-6-1985 there should have been 5 wooden cases bearing No. BZ-933 whereas on physical verification the wooden cases bearing the said number were found to be 6. Thus, various discrepancies with regard to challans were noticed.
(ix) During adjudication proceedings it was also found that the value of the seized goods as shown in the said 2 GP-1s did not tally with the value shown in the proforma invoice issued by the appellants factory which were also accompanying the goods during transport. This discrepancy also indicates that the GP-1s in question were not actually valid gate passes for the goods and the lack of consonance in the value occurred because a second consignment of the goods was sought to be covered by the same gate passes.
6. During the course of the arguments it was vehemently emphasised before us that no independent enquiry was made to ascertain as to whether or not the seized goods had already suffered duty. We are afraid this contention in the facts and circumstances of the case, cannot be accepted. It may be stated that on the basis of various enquiries made by the department before the issuance of the show cause notice it was found that the goods in question were illicitly removed without payment of duty under invalid gate passes and a part of such unaccounted goods were also secreted in the cycle stand shed within the factory which was not an approved place of storage and the appellants were issued show cause notice to explain the charge and the appellants did contest the show cause notice but without success.
7. Besides, from the impugned order on record we find that show cause notices were also issued to the said Shri H.S. Chawla, partner of the said Transporter M/s. Chawla Transporters and Shri Mohd. Kaleem Khan, Driver. By the impugned order the Adjudicating Authority recorded a finding that the said Transporter M/s. Chawla Transporters was a party in the manipulation in the instant case and excisable goods were being transported without a valid gate pass and under an old and used gate pass (by using them a second time over) with the knowledge and assistance of M/s. Chawla Transporters and the back dating on GR-5093 and other discrepancies pointed out in the impugned order prove the guilt on the part of the Driver and the Transporter and therefore, they arc guilty for contravening the provisions of Rule 52-A. On these findings he also imposed a penalty of Rs. 1000/- on the said Shri Harcharan Singh Chawla, partner of the said Transporter and also a penalty of Rs. 200/- on the said Driver Shri Mohd. Kaleem Khan and also ordered for the confiscation of the seized motor tempo HDL 8788 with an option to redeem the same on payment of redemption fine of Rs. 2000/-.
The said Transporter and the Driver have not challenged the said penalty and the confiscation by filing any appeal before us. This circumstance also lends assurance to our conclusion that the appellants were guilty of contravening the provisions of Rule 173-Q of the Central Excise Rules, 1944.
8. Before we part, it may be stated that the case law cited by the appellants was duly considered by us and while upholding the findings of the lower authority we had in our mind the broad propositions of law laid down therein.