Full Judgment
2. Show cause notice was issued to the appellants alleging that they did not account for 1,24,646 bags of cement manufactured during the period April, 1990 to 7.1.92 in their statutory record. Out of these bags of cement, a case for 3750 bags of cement was separately booked and show cause notice was issued for the same. They cleared these bags without payment of central excise duty without issuing gate passes and willfully, knowingly and intentionally with intend to evade payment of duty, suppressed the production and removed the excisable goods in the manner otherwise than as provided under the Central Excise Rules, 1944.
Thus, they have contravened the provisions of Rule 9(1), Rule 52A, Rule 173F and Rule 173G of the Central Excise Rules. The duty of Rs. 8,35,008.83 was, therefore, demanded and it was proposed to impose penalty on them under Rule 9(2), 52A read with Rule 173Q of the Central Excise Rules. The case was adjudicated by the Collector of Central Excise, Meerut under the Order-in-original No. 24/Collector/95 dated 23.3.95. On appeal filed by the appellants, the order of the Collector was set aside by the Tribunal and the Collector was asked to readjudicate the case and to pass a fresh order.
3. On re-adjudication, the impugned order was passed by the Commissioner of Central Excise by which he confirmed the demand of Rs. 8,17,290/- and adjusted the amount of Rs. 70,000/- deposited earlier by the appellants against the amount confirmed. A penalty of Rs. 8,70,290/- was also imposed on the appellants under Rule 9(2), 52A read with Rule 173Q of the Central Excise Rules and a penalty of Rs. 25,000/- was also imposed on C.O. Rajesh under Rule 209A of the Central excise Rules, 1944.
4. It was argued on behalf of the appellants that they are having a vertical shaft kiln and licenced capacity of the factory is 9000 MT and they could not have produced excess quantity which is alleged to have been removed clandestinely. It was admitted that there was clandestine clearance of 10424 bags for which they have agreed to deposit the duty of Rs. 70,000/- which was paid by them during the earlier proceedings when they caine before the Tribunal. Therefore, they are challenging the production of balance quantity. It was also pointed out that for 3750 bags of cement which were stolen and for which FIR was lodged, that has been separately settled under KVS Scheme. It was argued that in the show cause notice, numbers of cement bags dispatched as per parallel register which are shown to have been clandestinely removed are based on the figures of the register of cement filling and cement production register. It was argued that cement filling register shows datewise packing loading and despatch of the cement bags along with the name of the driver and this has been used for making payment for packing to the contractor. Cement production data register is a register which shows that details of production and clearance maintained by the labourers for making payment to them and this cannot be used as an authentic document for showing clandestine removal. In his statement dated 31.3.92, Shri C.O. Rajesh in reply to question that on 7.1.92 the central excise officers resumed a register from their offices for the period 1.11.91 to 7.1.92 maintained for packing, loading and dispatch of the cement on different dates. What you have to say that for what purpose, it is maintained and who maintained. In reply, it was stated that this register is maintained date wise for calculating the wages of labour for packing and loading of the cement in truck and payment is made to the labour as per this register. This register and payment vouchers are prepared by Shri Bahadur Singh as per direction of Shri C.S. Gupta. In his statement dated 10.3.92, Shri Chander Shekhar Gupta in reply to question No. 11 to the effect that on 7.1.92 the excise officers resumed the register from the office of the factory in which datewise information about the packing, dispatch and loading etc. of cement is given. This register is shown to you. The reply was that this register has been prepared to keep the accounts and work done by contractors. The entries made in this register appear to pertain about the packing, loading and dispatch of cement. In reply to question No. 12, he stated that this register is written by the clerk on duty, who deals with the work of contractor. It was argued that private records maintained by the labourers cannot be used for working the duty for clandestine removal as these are not evidence for clandestine removal. Reliance was placed on the following decisions: (Tribunal), where it was held that note book maintained by a casual worker containing entries of production not to be relied upon to establish clandestine removal unless supported by other evidence such as installed capacity of factory, raw-material utilization, labour employed etc.CCE, Meerut v. Raman Ispat Ltd. held that proceedings were rightly dropped by the Commissioner on the ground that the department collected no material to prove the authenticity of the seized private note books and for failing to trace/examine material witnesses.CCE, Coimbatore v. Velavan Spinning Mills.
where it was held that private note books and some statements relied by Revenue-Figures do not tally with seized private note books and no systematic method of maintaining records, noted.Bearing Manufacturing Co. v. CCE, Vadodara, 2000 (123) ELT-1148 (Tribunal);, where it was held that charge of clandestine removal based only on private records maintained by workers for their own purpose not sustainable when consumption of raw material to produce goods alleged to be clandestinely removed not actually proved and the fact of clandestine removal not otherwise established.Paras Laminates P. Ltd. v. CCE, Jaipur, it was held that burden to prove charge of clandestine removal is a serious charge to be proved by Department by adducing sufficient and tangible evidence.T.M. Industries v. CCE where the very genuineness and authenticity of the private records is challenged by the assessee, it is for the revenue to establish that the private records on whose basis the allegations of evasion of Central Excise duty had been leveled, were genuine and authentic.
5. It was also argued that the production shown in the factory in RG-1 and that shown in the private registers if totaled together then it comes to 13214.190 MT and the licenced capacity of the factory was 9000 M.T. Therefore, the appellants could not have produced excess quantity than the licenced capacity.
6. It was also argued that rate of duty of Rs. 90/- per M.T. has been correctly applied for the year 1991 but for the year 1991-92 onwards, it was wrongly taken as 50% ad-valorem although duty remained at the rate of Rs. 90/- per M.T., hence the demand needs to be recalculated.
7. The penalty has been enhanced from Rs. 2,00,000/- which was earlier imposed in the adjudication order which was set aside by the Tribunal and case was remanded and it has been increased to Rs. 8,70,290/-. The Collector could not have increased the penalty. Reliance was placed on the decision of the Supreme Court in the case of Bansi Dhar v. Union of India, reported in 1978 ELLT-J385.
8. On behalf of the Revenue, it was argued that the question of rate of duty was never raised by the appellants before the original authority or in the earlier proceedings when they had gone to the Tribunal.
Therefore, this point cannot be taken up by them at this stage when it was never contested by them earlier. It was argued that the entire case of clandestine removal is based on the registers maintained by the employees of the appellants and clearances have been corroborated by recovery of the goods in several cases. The persons who have maintained these records have clearly stated that records are being maintained by them and these are the correct records. Attention was also drawn to the findings of the Commissioner in para 21.3 where counsel for the present appellants during the adjudication proceedings admitted that no correlation could be possible, and therefore, the contention of duplication of removals against slips/challans/GR's/stock register is not pressed. Thus, clandestine removal has been accepted before the Commissioner by the learned advocate who was defending the appellants before the adjudicating authority. The learned SDR also pointed out that the intention of clandestine production and removal is also apparent from the very conduct of the factory when it was declared to be closed for production from 26.11.91 but on 7.1.92 when the central excise officers visited the factory, it was found working.
9. We have considered the submissions made by both the sides. The allegation against the appellant is that they have cleared 124646 bags of cement during the period from April 1990 to 7.1.1992 without payment of duty and without accounting for in the statutory records. The clearances of these unaccounted bags is based on the documents recovered from the factory and sales office of the appellant and transporter's premises which confirms the removal of cement from the factory without payment of duty and without following the proper Central Excise procedure. During the adjudication proceedings the Counsel of the appellant vide his letter dated 17.06.1996 submitted that he is not pressing the possibility of duplication of the figures of removal against slips/challans/GRs / Stock registers. We find that the appellants have claimed that out of total shortage in dispute, 3750 bags of cements were said to have been stolen from their factory and for which separate proceedings were initiated and the case was separately adjudicated. It was also claimed that their installed capacity is 9,000 M.T. per annum and they could not have manufactured the excess cement than the installed capacity. However, this contention of the appellant is not acceptable as Shri C.O. Rajesh, Production Incharge of the factory has himself admitted that the figure shown in parallel register pertains to cement produced and removed without payment of duty. In his statement dated 07.01.1992 he also confessed about the instances of receipt of clinker without any documents. The documents showing cement loaded in the vehicle bore the signatures of security personnel which clearly shows the cement was cleared from the factory. The total excess clearances without accounting for in the statutory records for about three years and during this period the cement could have been manufactured more than the installed capacity and periodically removed. The documents from where the clandestine clearances has been worked out are maintained by the staff of the appellant and not by any labourers. Therefore, the decision relied upon by the appellant on this issue in case of Gurpreet Rubber Industries (Supra) is not applicable in this case. The decision in case of Raman Ispat Ltd., (Supra) is also not applicable in this case as the records are maintained by the staff of the appellant and this has been confirmed by them. Similarly, the decision in case of Velavan Spinning Mills (supra) is also not applicable as in the present case the documents relied upon are maintained by the staff of the appellant and these are systematically maintained datewise. Therefore, clandestine removal is clearly established and the decisions relied upon by the appellant do not help them in any manner. The Commissioner has correctly came to the conclusion that the quantity of 120896 bags of cement was not accounted for in the statutory records and it was removed clandestine without payment of Central Excise duty.
10. The appellant had contested that the rate of duty was Rs. 90/- per MT during the year 1991-92 onwards but it was taken as 15% advelorum for working out the demand. Therefore, the demands needs to be recalculated. Copy of notification No. 23/89-CE as amended by notification No. 105/90 dated 16th May 1990 where the duty reduced from Rs. 115/- to Rs. 90/- per MT and also notification No. 24/91-CE dated 25th July 1991 where the duty was maintained at Rs. 90/- per MT for the factory not required to obtain an industrial licence and using vertical shaft kiln and the installed capacity does not exceed 200 tonnes per day or 66000 Tonnes per annum was produced. We find that in view of the notifications relied upon by the applicants the duty requires to be reworked out and re-quantified.
11. The applicant has also pleaded that during the first proceedings a penalty of Rs. 2 lakhs was imposed on them and when that order was set aside and remanded back to decide the case, the penalty was enhanced by the Commissioner equal to the amount of duty evaded. It was argued that the penalty originally imposed could not have been enhanced in denovo proceedings. Reliance was placed on the decision of Hon'ble the Supreme Court in case of Bansidhar v. Union of India (supra). We find that in case of Bansidhar v. Union of India it was the argument of the appellants that penalty could not be enhanced but it was not the decision of the Hon'ble the Supreme Court. The learned Counsel had also pointed out that this Tribunal in case of Vallabh Alloys Ltd. v.Commissioner of Central Excise, New Delhi Maestro Motors Ltd. v. Commissioner of Central Excise, Bangalore-I reported as has held that in the remand proceedings duty demand and penalties can not be enhanced. Since this Tribunal has already taken a decision on this issue of enhancement of the penalty in the remand proceedings, therefore, following these decisions, the Commissioner could not have enhanced the penalties from Rs. 2 lakhs which was originally imposed. Therefore, we reduce the penalty to Rs. 2 lakhs (Rupees two lakhs).
12. The appeal on other counts is rejected except that we reduce the penalty to Rs. 2 lakhs (Rupees two lakhs) and send back the case to the Commissioner only for the purpose of calculation of duty at the rate prevailing during the relevant period on 120896 bags of cement clandestinely removed.