Full Judgment
2. The brief facts of the case are that on 31-7-1982, the Assistant Collector of Central Excise, Mirzapur alongwith Preventive officers, paid a surprise visit to M/s. Mohd. Sattar & Co., the appellants herein had examined the records and physically checked and verified stock of Branded and unbranded Biris. On verification of the stock, it was found that there were 80,000 Branded biris in two jhals and 3,18,000 unbranded loose Biris in stock, whereas the book balance was 12,00,000 (Opening balance) Branded Biris and 2,24,77,100 (Opening balance) unbranded Biris as per RG-12A register. Out of 12,00,000 Branded biris, the assessee had removed 8,00,000 biris on payment of duty on 30-7-1982 which was authenticated by the Inspector Sector Incharge, but the balance had not been arrived on the register as such as per RG-12A register, there should have been 4,00,000 Branded Biris and 2,24,77,100 unbranded Biris in stock instead of 80,000 Branded biris and 3,18,000 unbranded biris actually found in stock. On further scrutiny of records, it was found that 1,24,350 biris received on 30-7-1982 from contractors were not shown in receipt column 6 of RG 12A. The said receipt of unbranded Biris on 30-7-1982 was shown only in their receipt register. On examination of RG-12A, it was further detected that on 27-7-1982 in column 7 of RG 12A, total quantity of unbranded biris was shown as 2,26,35,550 whereas it should have been 2,26,83,550 as such there was short accounting of 48,000 unbranded Biris in RG 12A register. Thus, there was total shortage of 3,20,000 branded biris and 2,23,31,450 unbranded Biris. A show cause notice was issued in 1983 which was adjudicated by the Additional Collector who by his order dated 12-4-1985, levied duty at the appropriate rate on 2,26,51,450 biris and imposed a penalty of Rs. 500/-. In appeal before the Tribunal, that order was set aside and matter remanded for fresh adjudication after observance of principles of natural justice and affording an opportunity of personal hearing and inspection of records.
Persuant to the remand order, the present impugned order has been passed upholding the charges against the appellants. Hence this appeal.
2. We have heard Shri A.N. Sharma, learned Consultant and Shri R.K.Kapoor, learned DR and carefully considered their submissions. We observe that the appellants herein is a Proprietary concern of which Smt. Shakooran Bibi (the aunt of the present appellant Sh. Mushtaq Ahmed) After the death of her husband, one Shri Mohammad Gaffar was managing the affairs of the factory. Smt. Shakooran Bibi died on 4-3-1982 and according to Wasiatnama (will) dated 2-9-1963 of Sh. Modh.
Sattar, Sh. Mushtaq Ahmed automatically became the sole proprietor of the firm with effect from that date. Sh. Mushtaq Ahmed wrote a letter to the Department on 7-3-1982, the free English translation of which reads as under "It is submitted that Smt. Shakooran Bibi the proprietor of the firm Mohd. Sattar & Co. Ganeshgang has expired on 4-3-1982 and after her death, the applicant has legally become the owner of the Toofan Mail Biri of M/s. Mohd. Sattar & Co. It is therefore, requested that the stock of Biris available may be got transferred to the applicant firm Sh. Abdul Ghaffar. As the applicant has come to know from some employees that Biris as per RG 12A are not in the stock, therefore, after necessary enquiries correct Biris may be got transferred." 3. Shri. A.N. Sharma contends that through this letter, the present owner had intimated the department about the shortage of stock of biris in the factory as per RG-12A register. This letter is in the nature of a request for transfer of stock of biris to the new owner rather than a request of enquiry into the shortage of biris. Further on 19-6-1982, annual stock taking was conducted in the factory and the stock was found to be tallied with the RG-23A balance and it is significant to note that the stock taking report was duly signed by the authorised signatory of the factory, one Sh. Rajjan Khan. This is the same person who has signed the stock taking report on 31-7-1982 in which shortages have been detected by the department. Sh. Mushtaq Ahmad has also tendered a statement admitting the shortage on 31-7-1982 (the statement has been referred to in the impugned order although a copy of the same is riot available on record). No satisfactory explanation has been preferred till date regarding this shortage.
4. We have gone through the statement dated 5-8-1992 of Sh. Abdul Ghaffar to the effect that after the death of Smt. Shakooran Bibi on 4-3-1982, Shri Mushtaq Ahmed became the owner of the firm and before leaving the firm, Shri Abdul Ghaffar handed over its business account of credit and debit to Shri Mushtaq Ahmad and that on the date of his handing over charge, there was a stock balance of 1,81,03,625 loose biris, 2 lakhs branded biris packed in jhals. Shri Abdul Ghaffar has also stated that during his tenure as power of attorney, the Excise work was being looked after by Shri Mohd. Haseen and Rajjan Khan (who is the Signatory to both the stock taking reports). In view of the above we see no force in the contention of the appellants that the stock taking report cannot be relied upon.
5. Regarding the capacity of the bonded store room and packing and labelling, room of the factory, the appellants have adduced trade opinion in support of the contention that such a huge stock of biris cannot be accommodated in the rooms having measurement as under -(1) Bonded store room : 20'.6" x 8'.6"(2) Labelling and pacing room : 23' x 15'(3) Bhatti & Counting room : 24'.5" x 10'.6" Further the stock of biris stored in the factory from July, 1981 to July, 1982 as per RG 12A register would belie this contention. The stock position is as follows -Balance as on Labelled Biris Unlabelled Biris Total Biris31-7-1981 1,24,65,700 1,24,65,70031-8-1981 1,32,43,700 1,32,43,70030-9-1981 15,20,000 1,30,58,150 1,45,78,15031-10-1981 22,80,000 1,29,37,000 1,52,17,00031-11-1981 34,00,000 1,32,78,425 1,66,78,42531-12-1981 31,20,000 1,68,57,750 1,99,77,75031-1-1982 31,20,000 1,68,57,750 1,99,77,75028-2-1982 2,50,000 1,77,29,425 1,79,29,42531-3-1982 2,00,000 1,07,95,050 1,99,95,05030-4-1982 ____ 2,09,40,600 2,09,40,60031-5-1982 4,00,000 2,01,36,250 2,05,36,25030-6-1982 ___ 2,15,40,700 2,15,40,70031-7-1982 4,00,000 2,26,49,450 2,30,49,450 From the above chart, it appears that more than one crores of biris have been stored in the factory in the past year. Hence the argument regarding capacity of the BSR in packing and labelling falls to the ground. The contention of the learned Consultant that biris being a perishable item, such a huge stock of 2 crores of biris could not be maintained over such a longer period as their shelf life is only 6 months, is not acceptable as it is quite possible, as revealed in the cross examination of Shri R.S. Singh, Inspector of Central Excise that the life of biris maybe extended upto one year if kept safe from moisture. As regards the next contention that Shri Abdul Ghaffar had shown an inflated balance of stock of biris in the factory, we find that even from March 1982 to July 1982 when the ownership of the factory had already devolved upon Shri Mushtaq Ahmad, the biris stock balance had accumulated from around 2 crores to 2.3 crores and therefore, we cannot agree with the inflated records was shown in the records. The adjudicating authority has rightly held that the shortage was detucted during the period when Shri Mushtaq Ahmad had become the owner/sole proprietor of the factory and he cannot absolve himself of the responsibility of paying duty due on biris on 31-7-1982 by shifting the blame on the previous Manager Shri Abdul Gaffar.
In the light of the above discussion, we uphold the finding of the Adjudicating authority, confirm the order of the Additional Collector and reject the appeal, subject however to the reduction of penalty to Rs. 500/-.
The cross objections are in the nature of comments on the impugned order. Hence no order is called for thereon.