Judgment:
1. These are four appeals filed by the above mentioned appellants praying for quashing the impugned order dated 28-11-97 passed by the Commissioner of Central Excise, Kanpur confirming the duty and penalty amounts, The main issues involved are as under: (i) Whether M/s. SCM and M/s. SI1 have taken wrong benefits of Notification No. 1/93, dated 28-2-93 during 1994-95 as they were using brand-name of another person (WCPL) and have thus evaded Central Excise duty amounting to Rs. 8,41/764.00 and Rs. 9,24,584.00 respectively.
(ii) Whether M/s. WCPL, M/s. SCM and M/s. SII have clandestinely manufactured and cleared Basic Chromium Sulphate (BCS) and Sodium Sulphate from the quantities of Soda Ash found short at the time of physical verification on 7-9-94 and have thus evaded Central Excise duty of Rs. 1,29,477.00, Rs. 3,81,933.00 and Rs. 4,15,044.00 respectively.
(iii) Whether M/s. WCPL have actually clandestinely cleared higher quantity of BCS and Sodium Sulphate as is evident from their Income Tax returns, than the clearances reflected in their RG-1 register and have thus evaded Central Excise duty of Rs. 16,884.00 during the years 1990-91 and 1991-92.
(iv) Whether penalty is imposable on M/s. WCPL, M/s. SCM and SII under Rule 9(2), 52A, 173Q and 226 of the Central Excise Rules, 1944 and (v) Whether penalty is imposable on Shri D.S. Sodhi, Shri R.K. Bajpai, Shri Diwakar Trivedi and Shri Pradeep Kumar Saxena under Rule 209A for their involvement in the duty evasion.
2. Briefly stated, the facts of the case are that M/s. Woodburn Chemicals (P) Ltd. are engaged in the manufacture of basic chromium sulphate and sodium sulphate falling under Chapter Heading 2833.00.
M/s. S.C. Manufacturers (herein after referred to as SCM for short) and M/s. Sphenax Industries (India) (herein after referred to as SII for short) are also engaged in the manufacture of the same items. All the three units were operating from adjoining plots in the industrial area at Unnao. Shri D.S. Sodhi, the fourth appellant is the Managing Director of M/s. Woodburn Chemicals P. Ltd. (for short WCPL). He is also Partner of SCM and Proprietor of SII. On the basis of intelligence reports, a truck coming from the factory gate of WCPL was intercepted and on examination it was found to contain 300 bags of basic chromium sulphate. On detailed examination; 4 different kinds of markings were found on these bags which showed that the same excisable goods were packed in gunny bags showing that they were manufactured by WCPL, SCM and SII. On examination of the RG-23A Part-1 accounts of the 3 units, it was found that the accounts relating to one of the major raw materials for production of basic chromium sulphate, viz. soda ash was not upto date in the case of any of the three units. On the basis of statements recorded from authorised signatories of WCPL and the other two units, the Department alleged that the appellants were wrongly availing the benefit of SSI Notification No. 1/93.
3. Appearing for the appellants, Shri M.G.S. Murthy, learned Advocate mainly contended that all the 3 units are registered separately and duly licensed for the production of basic chromium sulphate and sodium sulphate for the last several years. Basic chromium sulphate was being manufactured in two different grades. Even if the rate is the same, the prices differ and accordingly the assessable values and the quantum of duty. All the 3 units were duly filing classification lists year after year and all of them were being duly approved; that the audit parties were regularly visiting and checking the statutory records and nothing wrong was found during such audit; that the adjudication order regarding the 3rd show cause notice wherein 300 bags were seized held that they were manufactured and cleared by WCPL. No appeal was filed against this order. As such, the finding contained therein became final; that the shortage was found only in respect of soda ash; on comparison with the IT returns for 1990-91 and 1992-93 and with regard to the assessment year 1994-95, the same was suppositous shortage of soda ash; that no demand for 1991-92,1993-94 or 1995-96 was made against any of the 3 units, though assessments were made month after month up to March, 1995 for WCPL and August, 1994 for SII; that the proviso to Section 11A was invoked in respect of all the claims of short levy as well as non-levy; that the show cause notice does not require the appellants to show as to why the previously approved classification list should not be amended; that till now no question of amendment has been raised; further, how can duty be demanded as a short levy, when the classification lists remain unamended; that a plain reading of para 4 of the Notification with the Explanation III reveals that it is only "the specified goods bearing a brand" name..... of another person", that become disentitled to the benefit of exemption and not the manufacturer/assessee; that where is the need for explanation III, if the manufacturer (and not the specified goods) becomes ineligible to claim the benefit of the exemption; it is no longer necessary to compute the aggregate value excluding the goods bearing the trade mark of another, if, regardless of aggregate values, the manufacturer becomes ineligible and all goods manufactured by him do not get the benefit; that the onus rests heavily on the Revenue to prove the user of logo of WCPL and there is no evidence whatsoever in this regard; not a single bag manufactured by SCM and SII bearing the logo of WCPL found or produced from the premises of SCM or SII or from the purchasers; that in fact, although invited to do so, the raiding party declined altogether to check or inspect the printed bags of SCM or SII; significantly, no particulars of any stock of empty bags are furnished in respect of SCM or SII; that the liability sought to be foisted on them is purely on the basis of their perfunctory inspection of WPCL; that the adjudication against SCM and WCPL, as mentioned above, the 300 bags seized on 7-9-94 were found that they belonged to WCPL only and which have already been redeemed and duty paid and the findings thereon has become final and conclusive; that no contrary allegation or evidence admissible and no contrary finding can be arrived at in this case; that the 370 bags found unstitched in the finishing hall of WCPL, not a single bag found in the premises of SCM or SII; that in fact those premises were not visited although invited to do so; that the explanation offered in the reply to the show cause notice neither adverted to or discussed nor is there any finding that they were manufactured by SCM or SII; that the inspection subsequent to the raid not investigated; contravened or even adverted to; that the suppressed statements recorded in the course of enquiry not adverted to in the adjudication order, not produced even now despite notice; that on the contrary, the evidence of affidavits of customers has been dismissed lightly; that if the evidence on affidavits is not correct in law, the affidavit is a sworn statement and swearing a false affidavit is punishable offence, has to be accepted, if there is no evidence to the contrary; that above all, none of the above 370 bags was cleared and no liability to duty, again during the period 7-9-94 to 31-3-95 where there is neither an allega- tion nor evidence of continued use of logo of WCPL after raid on 7-9-94; that this being so, differential duty could not be demanded for the period between 7-9-94 and 31-3-95; that there is also no knowing of the actual differential duty due for the period 1-4-94 and 7-9-94; that the completed assessments of WCPL up to 31-3-95 were ignored; that no norms were fixed for the appellants; that the demand is suppositions and the same is time barred because regular assessments were made; frequent visits were paid, regular stock checking and audit was conducted; that there is no suppression in the classification list, suppression can only be of what the appellants are duty bound to disclose and suppression with intent to evade payment of duty can only be of something required to be disclosed; that there was no embargo on the appellants to disclose whether they are using any logo at all and if so their own logo or the logo of some one else; that there is no provision in the classification list nor does the concerned officer questioned the appellant in regard to the user of the logo; that clandestine removal has been alleged on the basis of an alleged shortage in one of the raw materials; that how could the goods be manufactured using one raw material only and how could any shortage be presumed in the case of SCM and SII at all on the basis of an assumed shortage in WCPL.
3.1 That Shri Sodhi's explanation has been ignored; that the two different grades are produced of different assessable values; that no aportionment in the demand for short levy/non levy; that how the calculation was arrived at; that the discrepancy between IT returns and statutory records only for WCPL and that too for two years only; that the demand for 1990-91 is barred by limitation; that the demand raised on 29-6-96, which is beyond six months is barred by limitation; that after the raid no shortages, no use of logo was adverted to; that the entire case is an after-thought and cooked up; that no penalties leviable as the show cause notice does not specify the specific clause and the show cause notice also does not disclose the penalty amount; that the penalty on Shri Sodhi is also unwarranted as no specific offence is attributed.
4. The learned Advocate has referred many decisions in support of his contentions; that despite the request by the appellants, they were not supplied the copies of statements by the Revenue which were in favour of the appellants and which were specifically referred to in their reply to the show cause notice also; that the same were not mentioned in the adjudication order.
5. The learned DR appearing for the Revenue has drawn our attention to page 1 para 4 of the order-in-original which specifically provides that a truck coming out of the factory gate of WCPL was intercepted by the officers of Central Preventive Branch of Central Excise, Kanpur and on examination, it was found to contain 300 bags of basic chromium sulphate. On detailed examination, 4 different kinds of markings were found on different bags as below: He, further contended that they were using common trade mark of WCPL; that they were not maintaining proper records/methods together. He reiterated the findings of the Commissioner on all the above 5 issues who has examined the same in detail in the impugned order duly supported by documents as well as oral evidence and the decided case laws; that the impugned order is wholly reasoned one and calls for no-interference.
6. After hearing the rival submissions, perusal of the records, cases cited by both the parties, we find that many of the points raised by the learned Advocate for the appellants remain unanswered in the adjudication order and are required to be appreciated by the Commissioner. As such, we feel that in the interest of justice, these appeals need to be remanded to the Commissioner for de novo adjudication after affording reasonable opportunity of being heard and supplying necessary documents required by the appellants. The appeals are thus allowed by remand.