| SooperKanoon Citation | sooperkanoon.com/21683 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai |
| Decided On | Mar-22-2001 |
| Reported in | (2001)(133)ELT435Tri(Mum.)bai |
| Appellant | M/S. Shivom Ply-n-wood Pvt. Ltd, |
| Respondent | Commissioner of Central Excise and |
2. During the arguments advanced by both sides, it appeared that on a point of law the appeals themselves were capable of being decided. For the reasons to follow, we do so on granting wavier of pre-deposit of duty and penalty as prayed for in these applications.
3. M/s. Shivom Ply-N-Wood Pvt. Ltd. (hereinafter called as "Shivom") and M/s. Shivshankar Plywood Inds. Pvt. Ltd. (hereinafter called as "Shivshankar") are private limited companies. Mrs. K.D. Wadhwa is the director of Shivom. In actual practice it was D.L. Wadhwa, Director of Shivshankar, who was looking after the operation of both the units.
Shivom were manufacturing block boards and plywood. Shivshankar were manufacturing veneer, resins and also plywood. Shivom were selling raw materials to Shivshankar. Certain raw materials were cleared without discharging the burden of duty thereupon. Several raw materials were cleared on gross under-valuation. Goods like timber were shown as sold by Shivshankar to Shivom where actually there was no such sale. Shivom used to sell their plywood grossly undervalued. In fact their sale value was less than the cost of manufacture. They also used to show sale of timber when there was no such sale. Shri Patade, an employee of Shivom in his statement claimed that timber was never sold and that plywood was often sold without discharging burden of duty. Shri Rao, another employee also accepted under-valuation and duplicate sale. Shri Bhalerao, buyer of these materials accepted under-valuation on part of Shivom. He stated that they have paid cash to cover the difference. On completion of investigations show cause notice was issued. The noticees requested for copies of the documents relied upon. These were supplied from time to time. On 20th September, 2000 the personal hearing had been fixed. On that date Shivom claimed that certain documents were yet to be received by them. They requested for supply thereof and for that purpose requested for further time of 30 days. The concerned Superintendent replied on that very day to the effect that copies of old documents had already been given and that if some document was still needed, they could take copies thereof within the next two days.
On 22nd September, 2000 Shivom replied to the Commissioner pointing out the particular documents, the copies of which were requested by them to be furnished. It appears that there was no further supply or correspondence but that the Commissioner passed ex parte orders on 31.10.2000. He made the following observation:- "The personal hearing was fixed on 13.6.00 but neither the assessee nor any representative of the assessee appeared before me. Further noticee at Sr. No. 2 to 9 also not appeared before me. Shri V.L.
Kelkar, authorised representative of M/s. Geeta Timber and Plywood, Nashik, M/s. Anjali Plywood, Nashik appeared before me on 13.6.2000, both the noticees have filed their written reply on 28.4.2000 with this office and I am considering the same." 4. He confirmed duty of Rs. 4,07,00,159/-. He imposed penalty of equal amount on Shivom. Penalties on the two directors as well as the staff of Shivom were imposed. Penalty was also imposed on Shivshankar.
5. The investigations were parallel in the case of Shivshankar.
Statements of their directors and the staff members were recorded. All these statements were incriminating. To cover the clandestine transactions, sales to fictitious dealers were also shown. Those dealers in their statements denied having ever purchased any goods from Shivshankar. The statement of the dealers who had purchased the goods were to the effect that the invoice values were about one fourth of similar goods sold by other manufacturers. As regards the supply of documents the same submissions and requests were made by Shivshankar also. The correspondence proceeded on the same lines as we have narrated above in the case of Shivom. The Commissioner passed ex-parte order on 31.10.2000. In this judgment the Commissioner observed that in spite of the documents having been provided to Shivshankar, they had not filed any reply nor had they appeared for personal hearing. In his ex-parte order, the Commissioner confirmed duty of Rs.3,19,55,603/-. He confiscated certain goods but permitted their redemption on payment of fines. He also imposed penalty on the staff and the directors as also on Shivom.
6. The point urged by Shri Prakash Shah appearing with Shri Poojari for all the appellants was that in not furnishing the copies of the documents relied upon and in not affording an opportunity to the noticees to be heard, the learned Commissioner had contravened the principles of natural justice thereby rendering both his orders as untenable. Smt. Arya submitted that the proceedings would show that on at least four occasions the assessees had been given liberty to and had in fact attended the office to take relevant copies. It was her submission that the assessees were using dilatory tactics to postpone the proceedings. She cited the Supreme Court's order in the case of Sanghi Textile Processors (P) Ltd. vs. CCE 1993 (65) ELT 357 where the Supreme Court had observed that the department could not reasonably supply copies of each and every document. In that case the assessee could inspect and take copies and department could give them compensation for that. Shri Prakash Shah counters and shows us the Rajasthan High Court judgment in the case of PGO Processors Pvt. Ltd. (2000 (41) RLT 741). In this judgment the cited judgment of the Supreme Court was referred to and distinguished. The High Court observed that this case could not be an authority for the proposition that the department was not obliged to supply copies of the documents relied upon. The High Court further observed that the judgment on the contrary establishes an express obligation of the department to supply copies by making the department pay for the cost of the documents. The Hon'ble Court also refused to rely upon other case law given by the Supreme Court and High Courts. In paragraph 14, the High Court observed as under:- "14. In the Principles of Administrative Law by M.P. Jain and S.N. Jain, Fourth Edition of 1986 page 248, after discussing several decisions it was observed as follows:- "While the principle is well established that the person concerned should be adequately informed of the case against him, there may be questions raised about the extent and context of the information to be given. Courts may have to decide whether in a particular case all the relevant material or evidence was disclosed to him or not. The court may hold in a case that it was not necessary to disclose a particular document or that what was disclosed was adequate; the extent and content of the information to be disclosed would depend upon the facts of each case." 7. Having considered both the submissions and the judgments, we asked Shri Prakash Shah whether the documents which were asked for but not given were of such magnitude as to effectively deny due representation to the assessees. It is his submission that the documents are such as would establish the correctness or otherwise of the quantum of demand and therefore there is no question of their being extremely material.
8. Shri Prakash Shah also showed us the Tribunal judgment reported in 2000 (40) RLT 1012 (Pro-Fashional Computers & Anr. Vs. CCE) in which the proceedings were remanded on the failure of the Commissioner to hear the assessees. This was in the face of the statement made by the Commissioner in the impugned order that the assessees had taken a number of adjournments.
9. The strong point made by Shri Shah in the case is that the assessees vide letters dated 22.9.2000 and 20.9.2000 had requested for a period of 30 days. Although they were given two days to take copies, on the department having been informed as to what copies wee required, the department had to given them any particular date for taking of the copies. The assessees were prohibited from filing total submissions in the absence of these documents and had suffered unduly by the Commissioner's having passed ex-parte orders.
10. The grievance is very often made by the department that in the matter of supply of copies the assessees often commit delay. It is also claimed that they ask for unnecessary documents thereby frustrating the attempts of the department to complete the proceedings. But the prime requirement is that whoever makes an accusation, has to supply the necessary ingredients to support that charge. This is by way of supply of documentary evidence relied upon. The evidence disclosed to the noticee and the nature of the severity of the charge made against him provide him an opportunity to state his case and defend himself. The law further requires that an opportunity should be given for hearing where any submissions which the assessees may not have put forth in writing, could be advanced or where there are any grey areas in the written submissions, they could be clarified. Due to the volume of the documents very often the prime requirement of supply of copies along with the show cause notice is not fulfilled, but unless each and every document relied upon is furnished to the assessee, the department cannot expect a reply from them. If the department feels that frequent request for supply of copies is a dilatory tactics, then it has to be said that the need for such request arises only because of the failure of the department to supply copies of each and every document relied upon at the time to service of the show cause notice. Once this responsibility is cast upon the department it cannot be charged by shifting the burden of the assessee by saying that their request for certain documents is only a dilatory tactics. In not acceding to legitimate and legal requests from the assessees who are noticees in a particular case, the Revenue is the ultimate loser where they lose patience and proceed to decide the case ex-parte. Even where the case is very strong against the assessee, any lacuna left in following the procedure is likely to result in the order of the Commissioner being set aside. The present cases are cases in point.
11. We asked Shri Prakash Shah that the grievance made may not stand in the case of other noticees. It is his submission that the other noticees are co-respondents and their fate would be ultimately decided on finding of the Commissioner about the complicity of the two principal assessees namely Shivom and Shivshankar. We see the point in his submission.
12. The revenue involved in this case is very substantial. It is therefore necessary that these cases should be finalised very speedily.
While, therefore, allowing these appeals on the sole and limited point of denial of natural justice, we deem it necessary to put time restriction on both sides. Within one month of the receipt of this order the Commissioner shall ensure that the copies as asked for by the two companies are despatched to them by the Commissionerate without any approach being made by the present appellants. Each of the present appellants will file full and complete replies within 30 days of the receipt of the documents from the Commissioner. The Commissioner shall give the present appellants a clear notice of three weeks for personal hearing. All the appellants will be bound to appear before him and make proper submissions.
I agree with the order dictated by my learned brother. I endorse the view made by him. The amount involved in both cases is nearly rupees eight crores and the department should take a proper action in giving the copies. These things would not have been dragged out. Therefore with a very heavy heart I have to allow the appeal and remand the matter. I agree with the order proposed by my learned brother.