Judgment:
Deepak Gupta, J.
1. The aforesaid four writ petitions are being disposed of by this common judgment since they all arise out of the same order.
2. Briefly stated the facts of the case are that the assessee was availing benefit of concessional rate of duty in respect of packing grade paper classified under sub heading No. 4805.90 in terms of notification No. 138/86/CE dated 1.3.1986. To avail the benefit of such notification and the concessional rate of duty, a manufacturer is required to manufacture the packing grade paper out of pulp containing not less than 50% pulp, by weight, made from non-conventional materials, i.e., pulp should not have been made out of bamboo, hard-wood, soft-wood, reeds or rags.
3. On 26.12.1986 the preventive staff of the Central Excise Collectorate, Chandigarh visited the factory premises of the assessee and examined its records. On examination of the record, according to the revenue, it was found that 51% to 52% of the pulp mixture by weight used by the assessee was from imported wood pulp, that is to say, that the assessee had not used more than 50% pulp from non-conventional materials and as such, it was not entitled to the benefit of the notification No. 138/86-CE.
4. A detailed show cause notice was issued to the assessee by the Collector, Excise. According to the revenue, though the asessee had shown that it had received 1522301 kgs of waste paper and white cutting from 14 different parties and out of this, 144091 Kgs were shown to have been purchased from 11 parties and balance 81,710 kgs was their own waste paper and white cutting received back from three parties to whom the paper had been sent for cutting on job work. It was alleged that in fact only 63555 Kgs were actually received out of the total quantity of 1522301 Kgs. and, therefore, according to the revenue, 1458746 Kgs were not actually received during the period 16.5.1986 to 7.7.1989.
5. During the course of the proceedings, statements of the suppliers who were alleged to have made supplies to the assessee were recorded. They denied having made supplies to the respondent. In fact some of the parties did not even exist at the addresses given by the assessee. Enquiries made from the sales tax barriers showed that no entries regarding such waste paper or waste cutting were entered at the barriers. The transporters who had allegedly transported the white cutting and waste paper also made statements that they had not transported any such material to the assessee. Keeping in view the statements and the record, the Assessing Officer came to the conclusion that this paper had never been received and false entries had been made in the books.
6. Thereafter, an argument was raised that even if this quantity of paper is not taken into consideration then also the assessee is entitled to the benefit of the said notification since the amount of unconventional material used still exceeds 50%. After analyzing the entire record and holding a proper enquiry, the assessing officer came to the conclusion that the charges alleged against the assessee had been established. The assessing officer determined the amount of duty at Rs. 68,21,417.95/-. He also imposed a penalty of Rs. 2 crores on the assessee and confiscated their land, building, plant and machinery. He imposed a penalty of Rs. 3 lacs on Sh. S.S. Khaitan who was the Managing Director of the assessee from 1.4.1986 to 31.12.1988. He further imposed a penalty of Rs. 5 lacs on Sh. S.K. Khaitan who was the Commercial Manager of the assessee. Penalty of Rs. 1 lac was imposed on Sh. Anil Khaitan who became the Managing Director from 1.1.1989 onwards. Penalty of Rs. 25,000/- was imposed on Sh. N.K. Vasu who was the Deputy Manager, Excise and Dispatch of the assessee. This penalty was imposed under Rules 173Q and 209A of the Central Excise Rules, 1944.
7. The assessee then filed an appeal before the Customs, Excise & Gold (Control) Appellate Tribunal (CEGAT). The Tribunal upheld the finding of the Collector. In so far as the determination of excise was concerned, it was found that the assessee was not entitled to the benefit of the exemption notification since it had not used pulp made from non-conventional materials exceeding 50%. However the penalty on the appellant was reduced to Rs. 1 crore. The penalty on Sh. S.S. Khaitan was reduced to Rs. l lac, penalty on Sh. Anil Khaitan was reduced to Rs. 35,000/-, penalty on Sh. S.K. Khaintan was reduced to Rs. 1,75,000/- and penalty on Sh. N.K. Vasu was reduced to Rs. 7500/-. The confiscation of land and building was also set aside. Aggrieved by the said order of the Tribunal, the assessee has filed the present appeal.
8. We have heard Sh. R.L. Sood, learned Senior Advocate appearing for the assessee and Ms. Shilpa Sood, learned Central Government Counsel for the revenue.
9. At the outset we may state that the present writ petition(s) were not the appropriate remedy available to the assessee. The assessee could have either sought reference of the substantial question of law if any or filed an appeal in terms of Section 35 of the Excise Act as they stood at the present time. However, keeping in view the fact that this writ petition has been pending for the last 9 years, we propose to dispose of the same on merits itself.
10. The scope of interference in a writ petition is very limited. In a writ petition, this Court cannot go on merits of the case and can only decide whether the decision making process is correct or not. Unless some perversity is pointed out this Court will not ordinarily interfere.
11. The first contention of Sh. R.L. Sood is that the assessee had filed the classification lists which had been approved by the appropriate authority under Rule 173-B of the Central Excise Rules and since the said classification lists were never changed by the authorities, the revenue could not determine or demand duty at a rate higher than that reflected in the classification lists. According to the assessee without the classification lists having been challenged or modified, the revenue was not entitled to withdraw the exemption to which the assessee was entitled to the benefit. There is an inherent fallacy in this argument. The classification lists were prepared on the basis of the declarations made by the assessee. The assessee in its declaration has stated that he would prepare uncoated packaging paper by using more than 50% raw material of unconventional type. No doubt the classification lists were approved but this was on the assumption that the paper being manufactured would be uncoated packaging paper and that more than 50% of the raw material, i.e., pulp would be manufactured from non-conventional materials. The classification of the item has not been changed. The allegation of the revenue is that instead of using more than 50% raw material of unconventional type, the plaintiff had used more than 50% of imported wood pulp and, therefore, is not entitled to the benefit of the notification No. 138/86-CE dated 1.3.1986. In our considered view merely because the classification list under Rule 173B had not been changed would not entitle the assessee to claim benefit of the exemption notification especially when it is proved on record that the assessee has forged the record and has made false entries to show that it had manufactured the uncoated packaging paper from out of waste paper, white cuttings etc. which in fact had never been received in its factory.
12. The revenue authorities have given a finding of fact that though the assessee claimed that it had received a total quantity of 1522301 Kgs of such waste paper from various parties between the period 1.3.1986 to 30.6.1989 in fact it had received only 63555 Kgs of such waste paper. This is a pure finding of fact which cannot be set aside in writ proceedings.
13. Sh. R.L. Sood strenuously urged that even if it is presumed that this finding of the revenue authorities is correct then also the assessee satisfies the condition of the notification No. 138/86 and according to him, the assessee had used more than 50% of pulp manufactured from non- conventional items.
14. The Tribunal has dealt with this argument in detail in the following terms:
9. The appellants contend that assuming, without admitting, that the quantity of 1373348 Kgs was waste paper/white cutting No. 1 was not received as alleged by the Central Excise department, the quantity of total pulp procured and consumed would work out to 14424886 kgs (15798234 - 1373348) and it is impossible to procure a quantity of 14972169 kgs of paper from 14424886 kgs of pulp.
9.1. The appellants have not taken into amount the quantity of waste paper/broke originated in the course of manufacture of paper. They have mentioned above that a quantity of broke/waste paper weighing 73,43,907 kgs was recycled for the manufacture of paper. This recycled quantity has been used for the manufacture of paper. Therefore, the quantity of broke recycled should be included in the quantity of other raw materials used I the manufacture of paper. Taking into account the quantity of the broke recycled and the quantity of pulp made from other materials, the following position would emerge:
1) pulp made out of imported 1,43,61,331 kgspulp, pulp obtained from Jutecuttings, gunny cuttings, hempcuttings and hemp (1,57,98,234-14,36,903)(as stated by the appellants)2) Pulp made out of the waste 73,43,907 kgsPaper (broke) originated inThe factory and recycled:3) Total (1) + (2) 2,17,05,238 kgsIt is thus evident that a quantity of 2,17,05,238 kgs was used for the manufacture of paper out of which quantity of 1,49,72,169 kgs of paper could easily be manufactured.
15. This finding is a pure finding of fact and cannot be interfered in writ proceedings.
16. Sh. Sood contends that the amount of broke taken into account while calculating the input should have also been counted towards the total output. This argument cannot be accepted. Both the authorities after going through the record of the assessee have come to the conclusion that the imported wood pulp used was 8378659 kgs whereas the unconventional material pulp was only 7728264 kgs which is less than 50%. This is a finding of fact which cannot be interfered with in a writ petition.
17. The revenue authorities have come to the conclusion that the records were manipulated by the assessee and the asssessee was found guilty of suppression and concealment of facts with intent to evade payment of duty for wrongly availing the benefit of the notification No. 138/86-C.E dated 1.3.1986 and accordingly penalties were imposed. The Tribunal has reduced the penalties imposed substantially. We see no reason to reduce the penalties any further.
18. It is however, pointed out to us that as far as Sh. S.S. Khaitan is concerned, he had expired on 31.12.1988 and this led to the appointment of Sh. Anil Khaitan as Managing Director of the Company. No penalty could have been imposed on a dead person. Therefore, the penalty imposed on Sh. S.S. Khaitan who had died is set aside.
19. In view of above discussion, all the writ petitions are dismissed with one set of costs assessed at Rs. 20,000/-. However, the penalty imposed on Sh. S.S. Khaitan is set aside.