TULSI INTERMEDIATES Vs. COMMISSIONER OF C. EX., VADODARA

JUDGEMENT

(1.) APPELLANT is engaged in the manufacture of organic chemicals falling under Chapter 29 of the schedule to the Central Excise Tariff Act, 1985. During the visit of central excise officers on 17 -3 -2006 duplicate copies of 11 delivery challans issued during the period from September, 2005 to March, 2006 were recovered and it was found that there were no corresponding central excise invoices or any other evidence to show that goods cleared under these delivery challans were cleared on payment of duty. On the same day, the duty payable on the value of the goods cleared under these delivery challans was calculated as Rs. 2,58,923/ - and interest. Rs. 9,451/ - and the same was paid on the same day by the appellant company. Subsequently show cause notice was issued on 1 -9 -2006 and in the adjudication and appellate proceedings the duty amount and the interest paid by the appellant have been appropriated towards the liability and penalties have been imposed on both the appellants. Hence the appeals.

(2.) LEARNED consultant on behalf of the appellants submits that the whole case of the department is made on the basis of delivery challans and the amount was recovered by the department by debiting the Cenvat credit amount forceably on the same date. Further, he also submits that in the show cause notice, the director Shri Ashokbhai B. Patel had submitted that he was looking after the company by pursuing the records and accounts of the company as produced by the employees and he was not physically dealing with any goods and therefore no penalty could have been imposed on him under Rule 26 of Central Excise Rules, 2002. He also relied upon several decisions in support of his contention that the case cannot be made only on the basis of delivery challans and admission statement without any other evidence such as purchase of raw materials, electricity consumption, statement of transportation, statement of buyers etc. Learned DR on the other hand submitted that what is admitted need not be proved and this is a settled law. Recovery of delivery challans showing evidence of clandestine removal of goods and admission statement of the director which has not been retracted at all are sufficient and therefore no further investigation was required to be conducted at all. He also relies upon several decisions in support of his contention that what is admitted need not be proved and also the imposition of penalty and submission of demand are to be upheld.

(3.) I have considered the submissions made by both the sides. In this case even though the learned consultant submitted during the arguments that there was a dispute between the director and the company and by the time show cause notice was issued or during subsequent period, the director had left the company but no evidence to support his claim was made available. I find even in reply to show cause notice, there is no retraction of the statement. In fact the director has only tried to avoid penalty by claiming that he had not dealt with the goods physically and therefore penalty under Rule 26 could not have been imposed on him. The company also has not disassociated itself from the director. Even now I find that before me also both the director and the company are represented by the consultant. This itself shows that the statement of the director is binding on the company. Further, the director had given a clear admission of recovery of delivery challans and had also voluntarily paid the duty with interest. Once the delivery challans contain the details of quantity of finished goods, the name of the consignee and the transporting details and the contents are admitted, there was no need for the department to investigate and confirm the same. In this case once the department recorded a statement from the director admitting clandestine removal and recovery delivery challans, the burden of proving that the delivery challans did not reflect the correct position and goods were in fact not cleared on the delivery challans shifted to the appellants which has not been discharged at any stage during the proceedings. Therefore in view of this position I do not find that the appellants have made out a case in their favour. Further, I find that the reliance of the consultant on the decision of the Honble High Court of Punjab and Haryana in the case of S.B. Packaging Ltd. reported in 2008 (223) E.L.T. 360 (P&H) = 2008 (9) S.T.R. 124 (P&H) is not relevant in view of the fact that in that case a view was taken that intention to evade duty was required to be established. In the facts of this case I have already come to the conclusion that department has indeed established such an intention by recovery of delivery challans and the statement of director. Therefore I do not find that this decision is relevant. Similarly, another decision of the Honble High Court submitted by the appellant is also not relevant since that also relates to the same issue. In the case of Matsyodari Steel and Alloys Pvt. Ltd. reported in 2008 (225) E.L.T. 176 (Bom.) Honble High Court of Bombay held that in that case there was no suppression of fact since appellant had claimed wrong cenvat/modvat credit and had paid the same before issue of show cause notice and wrong credit was availed during previous management of the facts of the case are different. Even though learned DR produced several decisions in support of his contention, I do not feel they need to go into all those cases since on the facts of the case I find that sufficient evidence has been produced by the department and it was for the defence to rebut the evidence produced by the department which they have failed to do as already observed by the above. Nevertheless, I find the observations of the Tribunal in the case of Tejwal Dyestuff Industries v. CCE, Ahmedabad reported in 2007 (216) E.L.T. 310 (Tri. -Ahmd.) cited by the learned DR and relevant paragraphs 49.1 to 51 read out by him are very relevant to the facts of this case and accordingly I reproduce the same.