ORDER
G.A. Brahma Deva, Member (J)
1. The appellants are engaged in the manufacture of Television sets, Tape Recorders and Two-in-ones. After seizing 40 pcs. National Panasonic RR-2160 Recorders and on physical verification of finished goods and other materials in the appellants’ factory, the appellants were charged for having contravened the provisions of Rule 9(1), 52A, 173B, 173C, 173F, 55 and 173G of the Central Excise Rules inasmuch as :-
(i) they have manufactured 40 pcs. of tape recorders falling under Tariff item 37AA valued at Rs. 22,000/- involving Central Excise duty of Rs. 3300/- and cleared the same without payment of duty and without proper accountal in the statutory Central Excise records and without issue of gate pass;
(ii) they had manufactured 6 pcs. of small TV sets (3 sets of 14″ and 3 sets of 12″ screen) and had failed to properly account for the same in the statutory records with an intention to evade duty amounting to Rs. 600/-.
(iii) they manufactured tape recorders falling under tariff item 37AA and Radio Cassette recorders falling under tariff item 33A and cleared the same w.e.f. 13-8-1984 valued at Rs. 8,34,841.00 involving Central Excise duty of Rs. 1,11,439.25 by issuing second set of invoices not accounted for in any statutory Central Excise records and cleared the same without payment of duty;
(iv) they purchased the picture tubes as per annexure ‘B’ to the show cause notice and had manufactured and cleared without issue proper documents and without payment of duty on 431 pcs. of 12″ TV sets and 110 pcs. of 14″ TV sets evading Central Excise duty of Rs. 54,100/- after the Budget of 1985;
(v) that for all the above clearances, they had neither maintained properly the raw material account in the form IV Register nor the finished stock register in the form RG 1 contravening thereby the provisions of Central Excise law;
(vi) they manufactured certain models of tape recorders and radio cassette recorders as stated at (iii) above and cleared the same without filing the classification list and price list to the concerned Central Excise authority;
(vii) they have suppressed the facts from the department by issuing second set of invoices for clearing the excisable goods manufactured by them with a clear intention to evade the payment of duty. Hence, the period of demand of duty is extended to cover period of more than six months.
2. Show cause notice was duly answered by the appellants denying the charges giving detailed explanation with supported documents. After considering the reply to the show cause notice, and submissions made by the party during the course of hearing, the Additional Collector did not accept the contention of the party and held that the appellants have cleared T.V.s, Tape recorders and Radio Cassette recorders clandestinely without payment of duty for the years 1984-85 and 1985-86 and without accounting in their statutory records. Accordingly, he held that they have contravened the provisions of Rules 173B, 173C, 173G, 173F and 52A of the Central Excise Rules, 1944. He demanded duty of Rs. 85,949/- in addition to imposition of redemption fine of Rs. 15,500/- on seized goods including Car. He also imposed personal penalty of Rs. 1,00,000/- under Rule 173Q of the Central Excise Rules. Hence, this appeal.
3. We have heard Shri J.S. Aggarwal, learned Advocate for the appellants and Shri G. Bhushan, learned S.D.R. for the respondent.
4. Shri J.S. Aggarwal, submitted that the appellants are not only manufacturers but also dealers and specifically carried trading activities of purchase and sale of goods in question from their Warehouse at A 287, Defence Colony, New Delhi at the material point of time. This fact was not denied by the Department, as both manufacturing and trading activity stood duly reflected in their balance-sheets. He said that detailed explanation was given by the appellants with supported documents which clearly shows that wherever they purchased the items, they were duly supported by purchase invoices and the goods manufactured by them and cleared were supported with gate passes. Since there was a huge transaction and voluminous evidence was placed before the Adjudicating Authority, it was only a co-relation problem but nevertheless it was duly explained before the Adjudicating Authority, in the course of adjudication proceedings. He drew our attention to the internal page 8 of the impugned order, wherein the Additional Collector has recorded categorical finding that gate passes produced by the appellants were not fake, but in the conclusion he has shown his helplessness by observing “I have no option but to reject their defence specially on the basis of the statement given by Shri Rakesh Chopra, Director of Toyo Electronics dated 21-8-1985 wherein he has stated that we do not have any such record of sale and purchase other than those seized by Central Excise Officers on 19-8-1985.” He submitted that discrepancy was only with reference to one picture tube as it was not properly recorded in the books of accounts and duty in respect of the same amounts to Rs. 100/- only. He filed a detailed chart showing discrepancy pointed out as mentioned in the show cause notice and in the impugned order and explaining the items either were supported by purchase invoices or supported by gate passes wherever the goods were manufactured by the appellants during the relevant period. He contended that though sufficient purchase invoices were placed before him, the same was not considered by the Adjudicating Authority and without making detailed enquiry from whom the goods were purchased but hold that as if the goods were manufactured by the appellants. He submitted that apart from merits of the case, the matter was heard by the Adjudicating Authority on 16-10-1986 but the order was passed on 25-11-1988 after a lapse of 2 years. The Adjudicating Authority ought to have given one more opportunity before passing the order as there was sufficient gap between the date of hearing and the date of passing the order. Accordingly, the order suffers from denial of principles of natural justice.
5. On the other hand, Shri Bhushan contended that the Adjudicating Authority was justified in raising the demand and imposing penalty for clandestine removal of the goods without payment of duty. The goods in question were not duly supported by valid documents as explained by the appellants and he drew our attention to the parawise comments given by the Collector to show that each and every aspect was considered by the Adjudicating Authority before arriving at the conclusion.
6. On a careful consideration of the arguments advanced on both sides, we find that the matter was heard by the Adjudicating Authority on 16-10-1986 and the case was transferred to the Collector on pecuniary jurisdiction and further it was re-transferred to the Additional Collector. Since sufficient time was taken and there was sufficient gap between the date of hearing and the date of passing the order, the Adjudicating Authority ought to have given one more opportunity to the appellants before passing the order. Since we are finding voluminous detail in Chart filed before us, we feel that it would be easy and appropriate for the Adjudicating Authority to re-examine the issues with reference to Chart. Accordingly, we remand the matter to the Adjudicating Authority for de novo adjudication and to pass an appropriate order after giving an opportunity to the appellants.
7. Thus, the appeal is allowed by remand.
ORDER
S.K. Bhatnagar, Vice President
8. With due respects to learned Member (Judicial) my views and orders in the matter are as follows :
9. I observe that in the statement of Shri P. Bhagat, Managing Director of the appellant concern it has been stated, inter alia, that the officers had intercepted on 19-8-1985 one car carrying 40 pieces of National Panasonic, their sister concern, M/s. Chad Electronics and had visited factory in follow-up action and it was admitted inter alia that “our RG1 Register for TV is maintained upto 3-8-1985 and 4-7-1985 in respect of 14 inches and 12 inches. For Tape Recorders RG1 Register is maintained upto 16-3-1985”.
10. This by itself shows that the appellants were not maintaining a proper and uptodate account.
11. It was also admitted in the statement that “upon physical verification of the stock it is found that we are having 3 sets of 14 inches and 3 sets of 12 inches in excess of our RG1 Register. 15 picture tubes of 14 inches are also in excess to our statutory central excise records”.
12. This further shows that the records are not properly maintained.
13. The reason given was that their Accountant who usually maintains excess records has not been coming and relevant entries have not been made and is unsatisfactory because it was entirely upto the appellants who have made alternative arrangements and ensure that relevant entries were made timely and properly.
14. The statement also refers to one Invoice No. dated 11-6-1985 for which no gate pass was issued and the explanation given was that “no gate passes had been issued, since the material goods was not delivered and the invoice was cancelled”.
15. The statement also refers to Sl. No. 11068, sale of Tape Recorder and Two-in-Ones from their company without issuing any central excise gate passes and the explanation given was “this has been done since we have purchased these items from other sources to make re-sale”. The statement also adds that at present “we do not have purchased bills or gate passes showing purchase for these sets but we shall produce the same within a period of week”.
16. The statement also further mentions that “central excise records of M/s. Deltron Electronics, A 287, Defence Colony were also lying in our office”.
17. The reason given is that their Accountant also does part-time work for M/s. Deltron Electronics may have brought them.
18. The statement also mentions that one of our Directors is the proprietor of M/s. Deltron Electronics.
19. I also observe that as per the order-in-original the statement of the two Directors S/Shri Rakesh Chopra and Sunil Vij and the third Director Shri Bhagat were at variance in many respects and in respect of the file containing copies of invoices of M/s. Toyo Electronics for which Shri Bhagat had promised to produce the purchase document later but the other two directors had stated that they do not have any other record of sale and purchase for purpose of trade and even according to Shri Bhagat, no entries had been made regarding them in excise records. And these variations, contradictions or deviation have not been satisfactorily explained.
20. I also observe that as per the Order-in-Original, enquiries were conducted regarding the invoices and M/s. Lakhanpal Ltd. had in their statement stated that they had placed the order for Sanwa Tape Recorders manufactured by M/s. Toyo, during 1984-85. 552 pieces of the same were received by them from M/s. Toyo Electronics and the major portion was returned back to the party on account of various defects. They had also reportedly stated that the goods were supplied to him on invoices and that no gate passes or any duty paying documents were supplied by M/s. Toyo. It had also been alleged that there were shortage of about 31 pieces of 12 inches picture tubes and 100 pieces of 14 inches picture tubes and for this discrepancy of the records of the appellants, no reason was apparent and the appellants have also not given any explanation and the Department felt that they had manufactured the Television Sets from the above mentioned picture tubes and cleared the same without accountal and payment of duty. As against this, I find that the learned Additional Collector has himself accepted that 395 pieces of tape-recorders of Sanwa brand sold by M/s. Toyo Electronics were genuine transactions and no duty could be charged from these tape-recorders.
21. Since the learned Additional Collector had examined the evidence produced by Shri Bhagat and gone to the extent of checking up the model, name, chasis number and invoices and gate passes and given the benefit due in this regard, I consider that it cannot be said that the matter was not examined thoroughly or properly by the Additional Collector and he has not applied his mind.
22. Since the appellants failed to give a satisfactory explanation to the department regarding remaining two hundred pieces of Sanwa tape-recorders and since in respect of many of the invoices co-relation could not be made in the absence of chasis number, the learned Additional Collector was justified in rejecting the defence specially on the basis of the statement, dated 21-8-1985 given by Shri Rakesh Chopra, Director.
23. In this connection, it is required to be noted that once the Deptt. is able to show and establish that the appellants were not maintaining the records properly, the burden shifts on the appellants to show that in respect of the quantity claimed by them was manufactured or purchased as the case may be, their liability and responsibility was duly discharged. It is also required to be kept in mind that in case a factory/firm/concern was indulging in both manufacturing and trading activity, it was necessary for them to maintain the accounts of both the activities separately and ensure that there was no mix up. I observe that the appellants had in this respect failed to take the necessary precautions.
24. It is also observed that the Additional Collector’s finding that the appellants had cleared TV’s, tape-recorder and radio cassette recorders without filing Classification List and Price List and without accounting for the same in the statutory central excise records and removing the same from the place of manufacture without following central excise provision is a very grave one; and the chart produced by the learned counsel read with the appeal Memorandum and the grounds of appeal and oral submission during the hearing does not in any way absolve them from the basic gravamen of the charge that the appellants had not maintained the record properly and had not complied with the prescribed requirement of filing a proper classification list and price list duly complying with excise formalities. The chart merely focusses on the quantity in respect of each type of goods in question and the appellants’ calculation and remarks. On the other hand, the Department has filed in reply paragraphwise comments with reference to the chart produced and these two documents do not tally in material particulars. Therefore, while looking at the case as a whole, it is evident that the matter is serious and the appellants are evidently liable to penalty in the light of observations made above, the exact quantum of duty and penalty would bear re-examination at the original level. Hence I agree with my learned brother that the adjudicating authority should re-examine the matter with reference to the charts and comments submitted by both sides and thereafter pass an appropriate order after giving an opportunity of being heard in the matter to the appellants.