HANUMANT CEMENT PRIVATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This is an application under Section 35-H of Central Excise Act, 1944. Reference is sought for in respect of an order dated 1.12.1999 (final order No. A/1099-1102/99- NBCDB) passed by the Customs, Excise and Gold (Control) Appellate Tribunal (in short, Tribunal) in Appeal No. E/A572-0575/99NB. Before the CEGAT, order of the Commissioner Central Excise Jaipur (in short. Commissioner) confirming a duty demand of Rs. 49,53,7837.00- and other demands of penalties were under challenge. In all four appeals had been filed. Allegations against the petitioner were that it had suppressed the production and clearance of 90,782.15 MTs of ordinary Portland cement during the period from 1-8-1993 to 19-8-1996 and evaded duty of the above amount. Penalty of amount equal to duty was levied under Section 11-AC of the Act. Penalty of Rs. 10.00 lakhs was also levied for contravention of the provisions of the Act and rules made thereunder. In addition, a penalty of Rs. 5.00 lakh each was levied on other three appellants-Directors of the petitioner company. M/s Hanumant Cement Pvt Ltd. According to the Commissioner, a clear case of clandestine removal was made out from the record seized from the factory premises, containing details of working in shifts, power break down, load shedding and number of bags of cement manufactured in each shift.

(2.) Stand of the petitioner before Tribunal was that evidence on record was not sufficient to sustain the duty and penalty against the company and penalty under Section 11 AC is* hot sustainable since the period of alleged offence is prior to the date of introduction of the said provision under the Act in September, 1996. It was further stated that penalty under Section 173Q of the Central Excise Rules, 1944 (in short, the Rules) cannot be imposed along with penalty imposed under Section 11 AC, and penalty on the directors are required to be set aside since the ingredients under Rule 209A under which penalty has been imposed have not been made out against the directors. It was contended that seized documents did not relate to petitioner. Revenue supported its action with reference to materials on record. It is to be noted that plea of non-counting of stock and erroneous adoption of production capacity was taken by petitioner.

(3.) Tribunal noticed that the seized records on the basis of which the case of clandestine removal has been made out was seized from the factory premises and one Jai Parkash admitted the entries on the record. The seized documents contain details of working of each shift, power break down, number of bags of cement manufactured in each shift, etc. They also contained signatures of the supervisors who were working in the day shift as well as night shift. One sample page from the seized record was also referred to and reproduced in order. Tribunal did not accept the plea that the records did not pertain to the appellant before it. The further stand that the factory was closed for some time in July, 1996 due to invalidation of ICI specification and due to .floods etc were also considered to be inconsequential on the face of details which the seized record revealed. It recorded a positive finding that the seized records pertained to production and clearance of cement by the petitioner. So far as the capacity of the mill is concerned, on 3.10.1996, the aforesaid Jai Parkash stated the capacity to be 100 MT per day and only after a gap of two years on 3.9.1998 when a reply to the show cause was given, the production was stated to be 50 MT per day. This was considered by the Tribunal to be an afterthought. The stand of the petitioner before Tribunal was that as a fact there was only one kiln upto June, 1996. Tribunal felt that if it was so, the assessee should have clarified the position at the earliest possible. Copy of the statement recorded, so far as Jai Parkash is concerned was not only given to him but also to Mahinder Chaudhary, Director of the Company and therefore the Company was obviously in the know of the things mentioned in the statement made by said Jai Parkash about the production capacity of the mill. Plea, therefore, to the effect that production capacity was 50 MT was rejected. Further stand relating to non-verification of physical stock was not accepted because stock verification was carried out in the presence of the accountant of the petitioner who ran away before completion of report and verification continued in the presence of a gate keeper who was in a position to count the filled bags of cement The destruction of internal gate passes on almost daily basis was held to be a further pointer to clandestine manufacture and removal of cement by the petitioner. The demand levied was accordingly upheld. However, penalty levied under Section 11AC was cancelled, whereas the levy under Rule 173Q was upheld, but quantum was reduced to Rs. 5.00 lakhs.. Penalty imposed upon each of the Directors under section 209A was also cancelled.