Neelam Textiles Vs. Commissioner of Central Excise, - Court Judgment

Excerpt:
1. the appellants manufacture processed cotton fabrics and processed man made fabrics falling under headings 52.06 and 55.08. on 21- 2-90, the central excise officers visited their factory premises and physically verified the stock of the finished goods as against the entry made in rg-1 register. during the course of checks, the officers resumed certain records. on scrutiny of the resumed documents, it was found that the two sets of invoices with different serial numbers. the finished goods cleared against the invoices in the duplicate account were without payment of duty. it was alleged that the party during the period from october, 1989 to 21-2-90 removed 88125 square metres of man made cotton fabrics and 105993,37 square metres of man made fabrics without payment of duty. further, the challan books of the appellants also revealed that 6515.30 square metres of the processed man made cotton fabrics and 9393.57 of the man made processed fabrics were removed against the said challans in respect of which no invoice or gp-1 was issued. the duty evaded in respect of these goods was worked out to rs. 3,25,909.39 during the period from 20-2-89 to 21-2-90.accordingly, a show cause notice was issued to m/s. neelam textiles, shri r.g. garg, managing director of m/s. neelam textiles and shri s.k.mitral, authorised signatory of m/s. neelam textiles. in this show cause notice, the first notice party was called upon to show cause why the aforesaid amount of duty should not be demanded from them under section 11a(1) read with rule 9(2). they were also called upon to show cause why the penalty should not be imposed under rule 173q on them.s/shri r.g. garg and s.k. mittal were called upon to show cause why the penalty should not be imposed under rule 209a on them.2. on considering the reply of the party, the commissioner of central excise, meerut vide his order dated 22-9-95 confirmed the demand of rs. 1,67,306/- on m/s. neelam textiles under the proviso to section 11a(1) and imposed a penalty of rs. 25,000/- on them under rule 173q. he also imposed a penalty of rs. 10,000/- on shri r.g. garg under rule 209a.3. this is an appeal against the impugned order of the commissioner.the appellants are not represented. the id. advocate has, however, sent a communication dated 23-1-02 in which it is stated that the case may be decided on merits. accordingly, i have heard shri r.c. sankla, id.jdr. in the written memo of appeal filed by the appellants, it is contended, that the allegation of clearance of processed fabrics on factory gate passes without payment of duty is not valid. it is stated that these fabrics were duly received from the customer as rejected.these were sold away to the staff and labourers at very low prices against invoices and not marked "excise" against the factory gate passes. it is contended that the adjudicating authority failed to appreciate that the figures in annexures iv, v and vi are the duplication of figures in annexures i and ii and do not represent any evasion of duty as such. it is further contended that the confirmation of duty in respect of the goods contained in the annexure viii based on recovery of some loose copies of invoices and daily challans in a file were also duty paid fabrics which had been returned to the appellant's factory by the customer as rejected. it is also stated that their contention in regard to the clearance based on the entries in private production register is also not properly appreciated. it is contended that this was only a private record of stock in process for technical staff which quantity had not reached the stage of final production but needed several other processes to be completed to become ready for despatch. it is further argued that the demand in respect of the entries made in annexure ix of stock register of different buyers found in a file resumed from the factory along with other documents/records is also not correct. the impugned order is also contested on the ground of time bar.4. i have considered these submissions. from the aforementioned grounds of appeal it is amply clear that the appellants were maintaining the duplicate copies of accounts and no entries were reflected in the statutory records in respect of the goods cleared under the duplicate documents. all the pleas now being advanced appeal" to be an afterthought which do not find any support from the evidence on records. the commissioner in his order has rejected all these pleas with detailed reasoning which in my view do not call for any interference. the plea of time bar of demand is also rejected in view of the same facts. in the light of these findings, there is no merit in the appeal and the same is accordingly rejected.

Judgment:
1. The appellants manufacture processed cotton fabrics and processed man made fabrics falling under Headings 52.06 and 55.08. On 21- 2-90, the Central Excise Officers visited their factory premises and physically verified the stock of the finished goods as against the entry made in RG-1 register. During the course of checks, the Officers resumed certain records. On scrutiny of the resumed documents, it was found that the two sets of invoices with different serial numbers. The finished goods cleared against the invoices in the duplicate account were without payment of duty. It was alleged that the party during the period from October, 1989 to 21-2-90 removed 88125 square metres of man made cotton fabrics and 105993,37 square metres of man made fabrics without payment of duty. Further, the challan books of the appellants also revealed that 6515.30 square metres of the processed man made cotton fabrics and 9393.57 of the man made processed fabrics were removed against the said challans in respect of which no invoice or GP-1 was issued. The duty evaded in respect of these goods was worked out to Rs. 3,25,909.39 during the period from 20-2-89 to 21-2-90.

Accordingly, a show cause notice was issued to M/s. Neelam Textiles, Shri R.G. Garg, Managing Director of M/s. Neelam Textiles and Shri S.K.Mitral, authorised signatory of M/s. Neelam Textiles. In this show cause notice, the first notice party was called upon to show cause why the aforesaid amount of duty should not be demanded from them under Section 11A(1) read with Rule 9(2). They were also called upon to show cause why the penalty should not be imposed under Rule 173Q on them.

S/Shri R.G. Garg and S.K. Mittal were called upon to show cause why the penalty should not be imposed under Rule 209A on them.

2. On considering the reply of the party, the Commissioner of Central Excise, Meerut vide his order dated 22-9-95 confirmed the demand of Rs. 1,67,306/- on M/s. Neelam Textiles under the proviso to Section 11A(1) and imposed a penalty of Rs. 25,000/- on them under Rule 173Q. He also imposed a penalty of Rs. 10,000/- on Shri R.G. Garg under Rule 209A.3. This is an appeal against the impugned order of the Commissioner.

The appellants are not represented. The Id. Advocate has, however, sent a communication dated 23-1-02 in which it is stated that the case may be decided on merits. Accordingly, I have heard Shri R.C. Sankla, Id.

JDR. In the written memo of appeal filed by the appellants, it is contended, that the allegation of clearance of processed fabrics on factory gate passes without payment of duty is not valid. It is stated that these fabrics were duly received from the customer as rejected.

These were sold away to the staff and labourers at very low prices against invoices and not marked "excise" against the factory gate passes. It is contended that the adjudicating authority failed to appreciate that the figures in Annexures IV, V and VI are the duplication of figures in Annexures I and II and do not represent any evasion of duty as such. It is further contended that the confirmation of duty in respect of the goods contained in the Annexure VIII based on recovery of some loose copies of invoices and daily challans in a file were also duty paid fabrics which had been returned to the appellant's factory by the customer as rejected. It is also stated that their contention in regard to the clearance based on the entries in private production register is also not properly appreciated. It is contended that this was only a private record of stock in process for technical staff which quantity had not reached the stage of final production but needed several other processes to be completed to become ready for despatch. It is further argued that the demand in respect of the entries made in Annexure IX of stock register of different buyers found in a file resumed from the factory along with other documents/records is also not correct. The impugned order is also contested on the ground of time bar.

4. I have considered these submissions. From the aforementioned grounds of appeal it is amply clear that the appellants were maintaining the duplicate copies of accounts and no entries were reflected in the statutory records in respect of the goods cleared under the duplicate documents. All the pleas now being advanced appeal" to be an afterthought which do not find any support from the evidence on records. The Commissioner in his order has rejected all these pleas with detailed reasoning which in my view do not call for any interference. The plea of time bar of demand is also rejected in view of the same facts. In the light of these findings, there is no merit in the appeal and the same is accordingly rejected.