MAN INDUSTRIES (INDIA) LTD. AND Vs. CCE

JUDGEMENT

(1.) The appellants were engaged in the manufacture of Aluminium profiles, bars and rods, tubes and pipes etc. falling under Chapter 76 of the Schedule to the Central Excise Tariff Act 1985. On 16.8.1996, officers of Central Excise visited their factory, checked the physical stock of finished goods vis -a -vis, the stock recorded in statutory records and seized the goods found unaccounted. They also visited certain other premises of the appellants and also the premises of their dealers. Records relevant to the investigation were resumed from the various premises. Subsequently, on different dates, the officers recorded statements (under Section 14 of the Central Excise Act) of some executives and employees of the appellant -company as also of others. From the documentary and oral evidence gathered by the investigating officers, it appeared to the department that the appellant -company had evaded payment of Central. Excise duty through clandestine removal of certain finished goods and deliberate under valuation of certain other finished goods. Therefore, show -cause notice [SCN] dated 3.3.1999 was issued to M/s Man Industries (India) Limited (appellants in E/2673/2002), the company's Managing Director Shri J.C. Mansukhani (appellant in E/2674/2001) and two other functionaries of the company. The SCN, which invoked the larger period of limitation under the proviso to Section 11A(1) of the Central Excise Act, raised the following demands of duty on the company:

(2.) We have heard both the sides and have carefully considered their submissions.

(3.) 1 The company had cleared goods for export also. The export documents showed the "catalogue weight" of the goods, which was more than the actual (physical) weight recorded in RG -1 register. Consequently, the weight of goods actually exported was less than what was shown in the export documents viz. AR4s, invoices etc. The SCN alleged that the differential quantity of goods had not been accounted and the same had been clandestinely cleared without payment of duty during the period, February 1994 to January 1999. This allegation was also based on the finding that the "gate register" and other records seized from the factory premises had shown that goods had been cleared without invoice and without payment of duty. The demand of Rs. 1,05.67,090 was raised on a total quantity of 641.145 MTs of goods which was allegedly cleared in the above manner during the above period, corresponding to which the total quantity of exports as noted by the Commissioner was 6507.073 MTs. The adjudicating authority has found that, out of this quantity of total exports, the exports made to M/s Man Intertrade Co. (UAE) are not to be taken into account for demanding duty and accordingly it has requantified the demand as Rs. 64,82,565. That authority has worked out this demand on the basis of the appellants' own records and statements. For instance, a letter issued by Sh. U.D. Selvan, Senior Engineer of the company, to their Indore office showed the catalogue weight of certain Aluminium Sections as 21986 kgs. and its physical weight as 21404.2 kgs. Shri Selvan, in his statement, confirmed this fact. Some official correspondence between functionaries of the company also indicated that the catalogue weight of export goods was 5 -10% more than the actual weight. Shri Deepak Das, Senior Manager (Tool Room), who was confronted with the letters, admitted that the catalogue weight (despatch weight) was always more than the physical weight. Shri Prahalad Das Sarda, Excise Officer and Authorised Signatory, stated that it was his function to make entries in RG -1 register on the basis of the Packing Department's reports which were prepared on the basis of actual weight. But he could not explain as to how the differential quantity of goods was disposed of. He further stated that he had only acted as per the directions of the Managing Director and the latter alone could offer any explanation. Shri J.C. Mansukhani, in his statement, admitted that, in some cases of exports, the catalogue weight was higher than the physical weight and the differential quantity of goods remained in the factory. However, he could not say as to how this quantity was disposed of. In the aforesaid example, the quantity of Sections exported under GP2 No. 58 dated 29.12.93 was shown as 21986 kgs (catalogue weight) whereas the actual weight was only 21404.2 kgs. The differential quantity (581.8 kgs.) was not actually cleared and exported, though, in RG -1 it was shown as debited for clearance for export. Shri Mansukhani, in his statement, conceded this factual position but could not say as to how the 581.8 kgs. of Sections remaining in the factory were disposed of. The Consultant for the appellants submitted before us that J.C. Mansukhani and Deepak Das had been wrongly quoted in the SCN and the Commissioner's order. He added that the allegation of clandestine removal of goods had not been proved by the department. Yet another submission made by the Consultant was that the difference in weight of the goods was less than 5% which, according to him, was too negligible to be taken into account. The DR submitted that the demand of duty was based only on the differential quantity admitted by the appellants and hence was irresistible. We are unable to accept the Consultant's arguments as we have noted that the demand of duty of Rs. 64,82,565 is based on the unrebutted documentary evidence gathered from the appellants' premises as well as the unretracted statements of the Managing Director and other responsible functionaries of the company. We have perused these statements and find that the adjudicating authority has correctly quoted and appreciated the same. The statements were never retracted, nor was any of the documents disowned. The result was that the differential quantity of goods, i.e. the difference between the actual (physical) weight and the weight shown to have been cleared for export, was proved to have been removed from the factory without invoices and without payment of duty. The differential quantity was admitted but its accountal and clearance in terms of the legal provisions were not shown. (In view of the admission of the differential quantity by the company authorities, it was not necessary for the adjudicating authority to allow them to cross -examine any officer of the department). The department's allegation of clandestine removal of the said quantity stood proved. The appellants have stated that the total exports quantity noted by the Commissioner (6507.073 MTs) is not correct and that the correct figure must be less by 95.614 MTs and, on this basis, the demand of duty should be reduced. We are unable to accept this claim as we find that the Commissioner has noted the above quantity from a report of the Deputy Commissioner of Central Excise, Division II, Indore, which has not been called in question in these appeals. Yet another ground of challenge to the demand of duty is that many of the exports taken into account by the Commissioner had taken place prior to the period of demand. This, again, cannot be accepted as J.C. Mansukhani admitted that the differential quantities remained in the factory. Such quantities which accumulated from past exports could well be removed during the period of demand. We uphold the above demand of duty for the reasons recorded.