The Commissioner Central Excise Vs. Air Carrying Corp (i) Pvt. Ltd. and ors. - Court Judgment

Excerpt:
excise - clandestine removal - penalty - determination of normal production- rule 173-e of the central excise rules, 1944 - on the basis of consumption of the furnace oil commissioner held, that the c.t.d bars must have been produced and clandestinely cleared by the assessee - on appeal, tribunal set aside the balance demand and reduced the penalty - whether the tribunal in any way erred in holding that the revenue had not proved the clandestine removal of any further goods as alleged for the addendum/corrigendum show cause notice and consequently setting aside the demand made thereinheld, revenue is entitled to consider and have regard to the installed capacity of the factory, raw material utilisation, labour employed, power consumed and such other relevant factors as may be deemed appropriate for the purpose of ascertaining normal production and clandestine removal as provided in rule 173-e - commissioner failed to consider the figures of the basic raw material viz. m.s. ingots consumed for estimating the production and only relied upon the consumption of furnace oil used for firing the furnace - during the relevant period the furnace was damaged and had developed a large hold in the roof resulting in higher consumption of furnace oil - since assessee had explained the higher consumption of furnace oil the view taken by the tribunal is clearly a possible view of facts - burden of proving clandestine removal was on the revenue which had not been discharged - therefore, there is no merit in the appeal - appeal dismissed - section 10: [swatanter kumar, c.j., a.p. deshpande & smt. nishita mhatre, jj] admission to professional colleges - technical courses - publication of brochure on basis of which candidates seek admission to various institution keeping in mind their merit and preference of colleges held, for ensuring adherence to proper appreciation of an academic course, it is essential that the method of admission is just, fair and transparent. the first step in this direction would be publication of a brochure on the basis of which the applicants are supposed to aspire for admission to various institution keeping in mind their merit and preference of college. brochure, firstly has to be in conformity with law and the statutory scheme notified by the competent authority. it is a complete and composite document as it deals with the scheme for conducting their entrance examinations, declaration of results, general instructions and method of admission, etc. this brochure is binding on the applicants as well as the authorities. this brochure or admission notification issued by the state or other competent authority cannot be altered at a subsequent stage particularly once the process of admission has begun. there is hardly any exception to this accepted rule of law. section 10: [swatanter kumar, c.j., a.p. deshpande & smt. nishita mhatre,jj] admission to professional colleges - technical courses - approval to additional seats or to start new course - cut off dates held, the settled principle of law is that merit of the applicant is the primary criteria which would determine his rank as well as the college where he would be entitled to admission. this rule should not be frustrated as it will tantamount to entirely upsetting the object of admissions based on merit oriented method and would cast cloud on the fairness and transparency of the method of admission. one of the ways in which merit can be defeated is allowing increase in the intake strength or commencement if new colleges beyond cut-off date and admissions beyond the last date specified in the notification/calendar issued by the concerned authorities. this can be illustrated by giving an example. college a which is running a professional course like engineering or mba etc. has an intake capacity of 60 seats which has duly been notified in the information brochure. however, after the cut-off date, approval is granted by the aicte and thereafter, the process is taken up by the state and the intake capacity of the college is increased by 30 more seats. these seats would obviously, not be notified in the information brochure and the candidate who are meritorious and for whom college a; be the college of reference could not get seats or give preference as the seats were limited. none had the proper knowledge about the increase in intake of seats though at a much subsequent stage and may be even after the last date of admission is over either by themselves or under the order of the court even it is put on the internet or given in the newspaper, the candidates of higher rank or meritorious candidates would not be able to avail of that benefit because they have already submitted the testimonial, have paid their fees and the courses have commenced. in that situation, for variety of reasons, they may not be able to take admission in the institution of their higher preference while the candidates of much lower merit will be admitted to that course. besides defeating the merit, it has been commonly noticed that the late admissions made by the colleges directly effect notified candidates who have questioned it more than often as their admission process is not so just, fair and transparent which has given rise to the litigation. it is also a kind of back door entry method. another serious consequence that result from such admissions is shortening of the academic courses in an undesirable manner. it is expected of other candidate selected to a professional course that he or she would complete the course in its entirety and not by missing more than a month or so in joining the said course. this results in lowering the excellence of education as well as harms the academic standard of professional education. admission to professional colleges: [swatanter kumar, c.j., a.p. deshpande & smt. nishita mhatre, jj] technical courses - held, in process of admission to professional colleges relating to technical courses, primarily three institutional bodies are involved. (i) all india technical council for technical education, (ii) state of maharashtra through director of technical education and (iii) university to which such institution is affiliated the role of all these institutions in distinct and different but for a common object. primary of the rule of all india council for technical education (aicte) is now well settled but that certainly does not mean that role of the state government and for that matter the university is without any purpose or of no importance. the council is the authority constituted under the central act with the responsibility of maintaining education standards and judging upon the infra-structure and facilities available for imparting such professional education. its opinion is of utmost importance and shall take precedence over views of the state as well as that of the university. the concerned department of the state and the affiliating university has a role to pay but it is limited in its application. they cannot lay down any guidelines or policies which would be in conflict with the central statute or the students laid down a by the central body. state can frame its policy for admission to such professional courses but such policy again has to be in conformity with the directives issued by the central body. while the state grants its approval and university its affiliation for increased intake of seats or commencement for a new course/college, its directions should not offend and be repugnant to what has been laid down in the condition of approval granted by the central authority or council. what is most important is that all these authorities have to work ad idem as they all have a common object to achieve i.e. of proper imparting of education an ensuring maintenance of proper standards of education, examination and ensuring proper infrastructure for betterment of educational system. only if all these authorities work in a co-ordinated manner and with co-operation they would be able to achieve the very object for which all these entities exist admission to professional courses: [swatanter kumar, c.j.,a.p. deshpande & smt. nishita mhatre, jj] admission schedule - interference by courts held, all the expert bodies viz. aicte as well as directorate of education in consultation with the departments of the state regulating the process of admission and maintenance of standards of education had notified a legal binding document specifying dates and schedule for various matters in relation to admission of students and commencement of courses. there has to be so compelling circumstances and grounds before the court to interfere with the prescribed schedule. it is neither so arbitrary nor so perverse, keeping in view the essential features relating to imparting education to professional courses that it should invite judicial chastisement to the extent of laying down entirely new schedule. merely because there has been some delay on the part of either of these authorities to timely grant of either of these authorities to timely grant or decline approval and permission to commence a course per se would not be sufficient ground for disturbing the notified schedule and timely commencement of courses. - desai, learned senior advocate appearing for the revenue took us through the order in original passed by the commissioner of central excise, thane dated 30th december 2005 and submitted that the tribunal was not justified in setting aside the well reasoned order passed by the commissioner. if the shortfall is not accounted for to the satisfaction of the said officer, he may assess the duty due thereon to the best of his judgment, after giving the assessee a reasonable opportunity of being heard. the view taken by the tribunal is clearly a possible view of facts and there is nothing on record to show that the tribunal has ignored or failed to take into consideration any relevant fact or that the view of the tribunal is in any way perverse.d.g. karnik, j.1. this appeal is directed against the common judgement and order dated 9th may 2008 passed by the customs, excise and service tax tribunal (for short 'the tribunal') filed by the respondent 1 and its directors.2. the first respondent herein is a private limited company and the second and third respondents are its directors. the respondent 1 is engaged in the manufacture and production of ctd bars. a show cause cum demand notice was issued to the first respondent by the joint commissioner, central excise, thane-1 proposing recovery of excise duty of rs. 11,06,430/- alleging clandestine clearance by the respondents 1, 2 and 3 of 471.075 metric tonnes of ctd bars valued at rs. 69,15,183/-. the respondent 1 approached the settlement commission for settlement vide its application dated 8th july 2004. during the pendency of the proceedings before the settlement commission, the joint commissioner central excise issued an addendum/corrigendum dated 19th october 2004 for recovery of excise duty of rs. 3,61,49,740/- and penalty on the allegation that the respondents 1 to 3 had made a clandestine clearance of 14,618.950 metric tonnes of ctd bars valued at rs. 22,59,35,872/-. by its order dated 13th september 2005, settlement commission rejected the application made by the respondent 1 for settlement and sent back the case to the commissioner of central excise for disposal of the show cause notice in accordance with law. on 13th december 2005, the commissioner, central excise thane-i, passed an order confirming excise duty of rs. 3,61,49,740/- and penalty for clandestine clearance of ctd bars. aggrieved by the order, the respondents preferred an appeal before the tribunal which by its order dated 9th may 2008 confirmed the duty and demand of rs. 11,06,430/- for clandestine removal of the goods as alleged in the first show cause notice as also imposition of penalty to the extent of rs. 3,00,000/- for such clandestine removal. the tribunal however set aside the balance demand of rs. 3,50,43,610/- made in the addendum/corrigendum notice and reduced the penalty to rs. 3,00,000/- only. aggrieved by the order of the tribunal the commissioner of central excise is in appeal.3. while approaching the settlement commission for settlement the respondent 1 had admitted clearance without payment of duty to the extent of 471.075 metric tonnes of c.t.d bars as was alleged against it in the first show cause notice dated 1st june 2004. the duty on the said clearance amounting to rs. 11,06,430/- has been confirmed by the tribunal. no appeal has been filed and in our opinion rightly so, in view of the admission by the respondent 1 before the settlement commission. the short question that arises for our consideration is whether the tribunal in any way erred in holding that the appellant had not proved the clandestine removal of any further goods as alleged for the addendum/corrigendum show cause notice dated 19th october 2004, and consequently setting aside the demand made therein.4. mr. r.v. desai, learned senior advocate appearing for the revenue took us through the order in original passed by the commissioner of central excise, thane dated 30th december 2005 and submitted that the tribunal was not justified in setting aside the well reasoned order passed by the commissioner. learned counsel submitted that on the basis of a specific information that the respondent 1 was evading the central excise duty, the officers of the excise department carried out search on 23rd and 26th june 2003 of the factory and office premises of the respondent 1, the premises of their customers m/s.navinchandra steel ltd. (the respondent no. 6 herein) and the premises of the transporters who had transported the goods from the factory of respondent 1 to respondent 6. c.t.d bars of 311.039 m.tonnes were found in the factory as against the quantity of 322.425 m.tonnes shown in the stock register. thus there was a shortage of 11.035 metric tonnes of c.t.d bars. there was however no difference between the stock register and the actual quantity of the m.s. ingots used as a raw material for production of c.t.d. bars. on further investigation carried out by the central excise authorities, it was discovered that the furnace oil consumed during the relevant period i.e from april 2002 to 23rd june 2003 was much higher than that would have ordinarily been required for the production of c.t.d bars during that period. the commissioner noted that about 50 litres of furnace oil is required for the purpose of production of 1 metric tonnes of c.t.d bars. on the basis of consumption of the furnace oil, the commissioner estimated the quantity of the c.t.d bars produced by he respondent no. 1 and after giving credit for the c.t.d bars shown to have been produced and cleared as per the records, held that the balance quantity of c.t.d bars must have been produced and clandestinely cleared by the respondent 1. the commissioner accordingly held that respondent 1 was liable to pay excise duty for the clandestine removal of c.t.d. bars and the penalty as mentioned earlier.5. mr. desai, supporting the decision of the commissioner submitted that the commissioner was entitled to estimate the production of c.t.d bars on the basis of the consumption of the furnace oil. in support, he referred to and relied upon a decision of the supreme court in triveni rubber and plastics v. collector of central excise, cochin : 1994(73) e.l.t. 76. we have perused the order of the tribunal. in paragraph 3 of the order, the tribunal has noted the contention of the revenue that the total furnace oil consumed during the period april 2002 to 22nd june 2003 was 11,32,600 litres. the tribunal also noted that the commissioner had on the assumption that 50 litres of furnace oil is required for production of one metric tonnes of c.t.d bars held that the respondent 1 would have produced 22,640 metric tonnes c.t.d. bars. the respondent 1 had shown to have produced only 8,021.050 metric tonnes of c.t.d. bars and paid excise duty on them. according to the commissioner, there was thus a shortage of about 14,618 metric tonnes of the c.t.d. bars shown to have been produced on the basis of consumption of furnace oil. the tribunal however did not agree with the conclusion of the commissioner that the respondent no. 1 had suppressed the production to the extent of 14,618 metric tonnes.7. rule no. 173-e of the central excise rules deals with the determination of normal production and reads thus:rule 173-e. determination of normal production - any officer duly empowered by the collector in this behalf may fix the quantum and period of time when the production in the assessee's factory was considered normal by such officer having regard to the installed capacity of the factory, raw material utilisation, labour employed, power consumed and such other relevant factors as he may deem appropriate. the normal quantum of production during a given time so determined by such officer, shall form the norm. the assessee shall, if so required by the said officer, be called upon to explain any shortfall in production during any time as compared to the norm. if the shortfall is not accounted for to the satisfaction of the said officer, he may assess the duty due thereon to the best of his judgment, after giving the assessee a reasonable opportunity of being heard.when there is an allegation that the manufacturer has produced more goods and has clandestinely cleared them and the actual production is required to be estimated for the purpose of ascertaining normal production and clandestine removal, the revenue is entitled to consider and have regard to the installed capacity of the factory, raw material utilization, labour employed, power consumed and such other relevant factors as may be deemed appropriate. in triveni rubber and plastics v. collector of central excise, (supra) the supreme court has held:on a reading of rule, we cannot agree that the officer empowered by the collector of the collector cannot determine the normal production unless all the factors mentioned in the rule are present simultaneously. the rule does not say so nor is it capable of being so interpreted.8. in triveni rubber, the supreme court has not laid down that the normal production can be determined only on the basis of energy consumed ignoring all other factors. all that the supreme court has said is that for determining normal production all factors mentioned in rule 173-e need not be present simultaneously. in a given case, where the accounts are fabricated the figures of raw material consumed or labour employed are not available it may not be possible to consider all the factors mentioned in rule 173-e for determining the production. in such a case, figures of energy used may be considered for the purpose of estimating the production. in the present case, m.s. ingots is the basic raw material used in the manufacture of c.t.d. bars. m.s ingots is an excisable commodity. credit of tax paid on m.s. ingots was available to the respondent 1 while paying duty on the final product. the figures of m.s. ingots need were available in the stock register and the actual stock tallied with the figures in the stock register. the commissioner did not consider the figures of the basic raw material viz. m.s.ingots consumed for estimating the production. he only relied upon the consumption of furnace oil which is used for firing the furnace in which m.s. ingots were converted into the molten steel before production of c.t.d bars. the respondent 1 had given reasonable explanation for higher consumption of the furnace oil. according to it, during the relevant period the furnace was damaged and had developed a large hold in the roof. this resulted in the loss of heat resulting in higher consumption of furnace oil. extensive repairs were carried out to the furnace during the years 2002-2003 and 2003-2004. about rs. 44 lakhs were spent on the repairs to the furnace and the expenditure was accounted for in the books. payment was made to the chartered engineer by cheque on 17th january 2003 i.e. prior to the commencement of the investigation in the present case. the certificate of the chartered engineer regarding the repairs carried out was produced before the commissioner. the material on record showed that the roof of the furnace had developed a large hole resulting into a huge heat loss. though statements of the directors of the respondent no. 1 and some other persons were recorded, the statement of the chartered engineer who had certified the repair work was not recorded. if his certificate was to be disbelieved the revenue could have and ought to have recorded his statement and/or called him for cross-examination. the tribunal has held that the respondent 1 had explained the higher consumption of furnace oil and therefore the ratio of the case of triveni rubber (supra) was not applicable to the present case. we find that on facts the tribunal has properly distinguished the decision of the supreme court in triveni rubber (supra) and concur with the finding of fact recorded by the tribunal that the furnace was severely damaged and on account of the consequent heat loss consumption of the furnace oil alone was not sufficient to estimate the production of c.t.d. bars. the tribunal has considered the admission of the respondent 1 before the settlement commission about the removal of the goods contained in the first show cause notice for which a duty of rs. 11,06,430/- has been imposed with a find of rs. 3,00,000/- . counsel for the revenue was not able to point out that there was any admission regarding the alleged clandestine removal of any larger quantity than the one shown in the first show cause notice. the respondent 1 has not admitted clandestine removal of c.t.d. bars as alleged in the addendum/corrigendum show cause notice. the burden of proving clandestine removal as alleged in the addendum show cause notice was on the appellant which has not been discharged. the tribunal, as the last fact finding authority, has held that the clandestine removal alleged in the addendum show cause notice was not proved. the view taken by the tribunal is clearly a possible view of facts and there is nothing on record to show that the tribunal has ignored or failed to take into consideration any relevant fact or that the view of the tribunal is in any way perverse.9. for these reasons, there is no merit in the appeal which is hereby dismissed summarily.