M/S. Laxmi Engg. Works and Shri Vs. Cce, Delhi - Court Judgment

Excerpt:
1. these two stay applications arise out of appeals bearing nos.t/1136/2001-nb(v) filed by m/s.laxmi engg. works and e/1100/2001-nb(d) by bhupinder jain (appellant no.2) against the common order in original dated 20.2.2001 passed by the commissioner confirming the duty demand and imposing penalty of the amounts detailed therein.the appellants have sought the waiver of those amounts for the purposes of hearing of their appeals, in these stay applications.2. while arguing the stay applications, the learned counsel has contended that the impugned order in original of the commissioner is prima facie legally not sustainable as the same had been based on surmises and conjectures. the slip pads, registers and loose papers allegedly recovered from the factory premises were disowned by the appellants and entries therein could not be relied upon by the learned commissioner for determining the production and clandestine removal of the goods as those did not stand proved on record at all. the testimony of sohan lal, supervisor could not be legally used against the appellant as he was never submitted for cross-examination during the adjudication proceedings, for testing his veracity. there was no material on the record to prove the clandestine manufacture and disposal of the goods by the appellants who were only working as job workers. he has also submitted that even the alleged confessional statement of bhupinder jain (appellant no.2) was taken under duress and threat of arrest one day earlier to the date of marriage of his son which was fixed for 30.11.95 and that he thereafter retracted that statement and also complained to the commissioner that his statement was taken under threat and by coercion. the learned counsel has drawn our attention to the copies of the letters and telegram placed by the appellants on the file in that regard. the counsel has also argued that the proceedings were drawn intially against the appellants only on the basis of interception of one tempo xxxxxx carrying the copper wire rods on 29.11.95 near shahdara flyover, but those proceedings so far had not attained finality and the matter is till pending before the commissioner (appeals).3. regarding imposition of penalty under section 11-ac of the central excise act the learned counsel has contended that the same could not at all be ordered as the provisions of the said section were not on the statute during the period in which the evasion of duty on the part of the appellants had been alleged. similarly, according to the counsel, extended period of limitation could not be invoked prima facie as there was no concrete allegations and proof of suppression of facts by the appellants who were paying the duty on the goods manufactured and cleared by them as per record from the factory.4. the learned counsel has also pleaded the financial hardship of the appellant by contending that they are working only as job workers as they were making copper rods from copper ingots/sillies which they were receiving from outside, at shahdara and their unit was already facing the closure order on account of the apex court direction regarding shifting of all the unit from shahdara to outside delhi. therefore, they are unable to pre-deposit any amount of duty or penalty.5. on the other hand, the learned svr has only reiterated the correctness of the order.7. it has not been disputed before us by the learned sdr that the present case has been drawn on the basis of recovery of some slip pads, one register and some loose papers from the factory premises of the appellants which was effected on a follow up action against seizure of one tempo on 29.11.95 carrying copper wire rods, near shahdara flyover petrol pump but those seizure proceedings had not attained the finality as the matter is stated to be pending before the commissioner (appeals). the statement of sohan lal, supervision regarding the entries in the alleged recovered slip pads, registers and loose papers about the manufacture and clandestine removal of the goods, prima facie, could not be made use of as he was never produced for cross-examination during adjudication proceedings. no statement of any supplier of raw material to the appellants or of any buyer regarding the purchase of the goods from the appellants, was recorded during the adjudication proceedings. in the show cause notice names of the buyers had been disclosed but there is nothing on the record to show if their statements were recorded.8. no prima facie concrete and cogent material has been pointed out by the learned svr for invoking of the extended period of limitation against the appellants. the unit of the appellants was registered with the central excise and they were paying the duty on the manufactured goods as shown in the record. the question whether the duty demand could be raised and penalty could be imposed on them on the basis of mere entries in slip pads, loose papers and registers and whether the statement of shri sohan lal regarding those entries who failed to submit himself for cross-examination, could be used and taken note of for calculating the quantity of the goods clandestinely manufactured and removed and for working out the amount of duty evaded or not, is purely a question of fact which needs detailed scrutiny and discussion.even the evidential value of the retracted statement of bhupinder kumar jain (appellant no.2) which was recorded under the circumstances as narrated by him, requires judicial scrutiny. excepting the above referred evidence, there is no other material to the substantiate allegations of clandestine manufacture and removal of goods as contained in the show cause notice, against the appellants as even not disputed by the learned sdr. he has also not disputed that final decision on the admissibility and legal value of above said evidence can be given only after hearing the appeals on merits and not at this stage.9. the financial hardship of the appellants had been also not much disputed/controverted before us by the sdr. there contention of the counsel that for want of any concrete or specific allegations and proof of suppression facts, extended period of limitation could bot be invoked, cannot be said to be prima facie baseless, as even sdr has not been able by referring to any specific document/material on record, to rebut the same. similarly the submission of the counsel that section 11-ac of the act was not on the statute during the period of alleged evasion of duty by the appellants for imposing penalty thereunder, prima facie, appears to be sound.10. therefore, keeping in view the facts, circumstances of the case, the submissions made by the counsel and discussion made above, in our view the appellants have got a good/strong prima facie case. the equity of balance and convenience by taking into consideration their financial hardship are also in their favour for allowing waiver of pre-deposit and staying recovery of the duty and penalty amounts as detailed in the impugned order. consequently both the stay applications of the appellants are allowed unconditionally. the appeals, however, as was requested at the time of arguments, are ordered to be posted for hearing for an early date.

Judgment:
1. These two stay applications arise out of appeals bearing Nos.t/1136/2001-NB(V) filed by M/s.Laxmi Engg. Works and E/1100/2001-NB(D) by Bhupinder Jain (appellant no.2) against the common order in original dated 20.2.2001 passed by the Commissioner confirming the duty demand and imposing penalty of the amounts detailed therein.

The appellants have sought the waiver of those amounts for the purposes of hearing of their appeals, in these stay applications.

2. While arguing the stay applications, the learned counsel has contended that the impugned order in original of the Commissioner is prima facie legally not sustainable as the same had been based on surmises and conjectures. The slip pads, registers and loose papers allegedly recovered from the factory premises were disowned by the appellants and entries therein could not be relied upon by the learned Commissioner for determining the production and clandestine removal of the goods as those did not stand proved on record at all. The testimony of Sohan Lal, Supervisor could not be legally used against the appellant as he was never submitted for cross-examination during the adjudication proceedings, for testing his veracity. There was no material on the record to prove the clandestine manufacture and disposal of the goods by the appellants who were only working as job workers. He has also submitted that even the alleged confessional statement of Bhupinder Jain (appellant No.2) was taken under duress and threat of arrest one day earlier to the date of marriage of his son which was fixed for 30.11.95 and that he thereafter retracted that statement and also complained to the Commissioner that his statement was taken under threat and by coercion. the learned counsel has drawn our attention to the copies of the letters and telegram placed by the appellants on the file in that regard. The counsel has also argued that the proceedings were drawn intially against the appellants only on the basis of interception of one tempo xxxxxx carrying the copper wire rods on 29.11.95 near Shahdara Flyover, but those proceedings so far had not attained finality and the matter is till pending before the Commissioner (Appeals).

3. Regarding imposition of penalty under Section 11-AC of the Central Excise Act the learned counsel has contended that the same could not at all be ordered as the provisions of the said section were not on the statute during the period in which the evasion of duty on the part of the appellants had been alleged. Similarly, according to the counsel, extended period of limitation could not be invoked prima facie as there was no concrete allegations and proof of suppression of facts by the appellants who were paying the duty on the goods manufactured and cleared by them as per record from the factory.

4. The learned counsel has also pleaded the financial hardship of the appellant by contending that they are working only as job workers as they were making copper rods from copper ingots/sillies which they were receiving from outside, at Shahdara and their unit was already facing the closure order on account of the Apex Court direction regarding shifting of all the unit from Shahdara to outside Delhi. Therefore, they are unable to pre-deposit any amount of duty or penalty.

5. On the other hand, the learned SVR has only reiterated the correctness of the order.

7. It has not been disputed before us by the learned SDR that the present case has been drawn on the basis of recovery of some slip pads, one register and some loose papers from the factory premises of the appellants which was effected on a follow up action against seizure of one tempo on 29.11.95 carrying copper wire rods, near Shahdara Flyover Petrol Pump but those seizure proceedings had not attained the finality as the matter is stated to be pending before the Commissioner (Appeals). The statement of Sohan Lal, Supervision regarding the entries in the alleged recovered slip pads, registers and loose papers about the manufacture and clandestine removal of the goods, prima facie, could not be made use of as he was never produced for cross-examination during adjudication proceedings. No statement of any supplier of raw material to the appellants or of any buyer regarding the purchase of the goods from the appellants, was recorded during the adjudication proceedings. In the show cause notice names of the buyers had been disclosed but there is nothing on the record to show if their statements were recorded.

8. No prima facie concrete and cogent material has been pointed out by the learned SVR for invoking of the extended period of limitation against the appellants. the unit of the appellants was registered with the Central Excise and they were paying the duty on the manufactured goods as shown in the record. The question whether the duty demand could be raised and penalty could be imposed on them on the basis of mere entries in slip pads, loose papers and registers and whether the statement of Shri Sohan Lal regarding those entries who failed to submit himself for cross-examination, could be used and taken note of for calculating the quantity of the goods clandestinely manufactured and removed and for working out the amount of duty evaded or not, is purely a question of fact which needs detailed scrutiny and discussion.

Even the evidential value of the retracted statement of Bhupinder Kumar Jain (appellant no.2) which was recorded under the circumstances as narrated by him, requires judicial scrutiny. Excepting the above referred evidence, there is no other material to the substantiate allegations of clandestine manufacture and removal of goods as contained in the show cause notice, against the appellants as even not disputed by the learned SDR. He has also not disputed that final decision on the admissibility and legal value of above said evidence can be given only after hearing the appeals on merits and not at this stage.

9. The financial hardship of the appellants had been also not much disputed/controverted before us by the SDR. There contention of the counsel that for want of any concrete or specific allegations and proof of suppression facts, extended period of limitation could bot be invoked, cannot be said to be prima facie baseless, as even SDR has not been able by referring to any specific document/material on record, to rebut the same. Similarly the submission of the counsel that Section 11-AC of the Act was not on the statute during the period of alleged evasion of duty by the appellants for imposing penalty thereunder, prima facie, appears to be sound.

10. Therefore, keeping in view the facts, circumstances of the case, the submissions made by the counsel and discussion made above, in our view the appellants have got a good/strong prima facie case. The equity of balance and convenience by taking into consideration their financial hardship are also in their favour for allowing waiver of pre-deposit and staying recovery of the duty and penalty amounts as detailed in the impugned order. Consequently both the stay applications of the appellants are allowed unconditionally. The appeals, however, as was requested at the time of arguments, are ordered to be posted for hearing for an early date.