COLT CEMENT PVT. LTD. Vs. CCE

JUDGEMENT

(1.) THE Central Excise officers visited the factory of the appellants on 7.1.92. On scrutiny of their RG -1 register, they found that no production and clearance of cement was recorded from 26.11.91 as the factory was shown closed. However, there was a balance of 36 bags of cement. 673 bags of cement were packed on 7.1.92 itself but no production report for packing of the cement was found. Therefore, detailed investigation with reference to the record was conducted by resuming their records from their sales office and factory premises. On scrutiny of the records, it was found that the factory has manufactured and cleared cement bags after 26.11.91 without accountal in RG -1 register and without issue of any gate pass evidencing payment of central excise duty despite the fact that the factory was shown closed from 26.11.91. Challan No. 384 dated3.1.92 was showing dispatch of 200 bags of cement to M/s. Rahul Cement Company, Pilibhit and builty No. 3 dated 6.1.92 was showing clearance of 160 bags of cement to M/s. Sarswa Transport, Haldwani as per gate pass register maintained by security staff of the factory. On examination of the record, it was found that the factory has manufactured and cleared 5507 bags of cement during the period April, 1990 to August, 1990, 85628 bags of cement during the period September, 90 to Feb. 91, 23630 bags of cement during the period March, 1991 to October, 91 and 9881 bags of cement during the period November, 91 to January, 92 without payment of central excise duty and without showing production in their RG -1 register. Thus, the total quantity of 1,24,646 bags were removed without proper accountal and without payment of central excise duty. During investigation, the statements of various persons were recorded. Shri Bahadur Singh, an employee of the factory, in his statement dated 7.1.92 stated that register showing datewise entries of packing and dispatch of cement bags for the period from 1.11.91 to 7.1.92, recovered front the factory, was maintained by him. He also confirmed that challan No. 384 dated 3.1.92 for 200 bags of cement was prepared by him. Shri Pan Singh, another employee of the factory confirmed that challan No. 384 dated 3.1.92 bears the signature of Shri Bahadur Singh and Shri C.O. Rajesh. The slips recovered from the factory were prepared for loading cement bags in the truck by the security staff of the factory. Shri C.S. Gupta, Liaison Officer, confirmed the quantity of cement to be loaded in a particular truck. Slips are being given by Shri Pan Singh to security superviser/guard. Shri Bachhi Singh, Security Officer on duty admitted that truck No. UHB 5046 loaded with cement bags passed from the factory gate on 7.1.92 without giving any paper; to him at gate. Shri Arjun Singh, Salesman and clerk admitted in his statement of dated 8.1.92 that cement stock register resumed was for sale and purchase of cement. He has neither received any gate pass or challan for the cement. Bags cleared on 1.1.92 from the appellaht company. Shri C.S. Gupta, Liason Officer, of the appellant factory confirmed that he was aware of the despatch of 200 bags of cement on truck No. UHB 5046 on 7.1.92. Shri C.O. Rajesh, Works Manager of the factory being overall responsible for production dispatches and accounts of the factory, was fully aware that factory was running during the period 26.11.91 to 7.1.92 and there had been clearances of cement from the factory in contravention of the various provisions of the Rules but gave a false and misleading information to the department that the factory was not running during the period under reference and whatever clearances were there, they were made under proper duty paying documents. Shri C.O. Rajesh admitted that the register recovered for the period September, 1990 to February, 1991 was showing details of production, loading and dispatch of cement without payment of duty. Shri C.S. Chauhan, Managing Director of the appellant factory was seeing the register for the period 1990 to Feb. 91, indicating details of production, loading and dispatches of cement bags. He had lodged FIR with the police for the theft of around 3000 bags of cement. He confirmed that all the delivery challans bore the signatures of the employees of his factory.

(2.) SHOW cause notice was issued to the appellants alleging that they did not account for 1,24,646 bags of cement manufactured during the period April, 1990 to 7.1.92 in their statutory record. Out of these bags of cement, a case for 3750 bags of cement was separately booked and show cause notice was issued for the same. They cleared these bags without payment of central excise duty without issuing gate passes and willfully, knowingly and intentionally with intend to evade payment of duty, suppressed the production and removed the excisable goods in the manner otherwise than as provided under the Central Excise Rules, 1944. Thus, they have contravened the provisions of Rule 9(1), Rule 52A, Rule 173F and Rule 173G of the Central Excise Rules. The duty of Rs. 8,35,008.83 was, therefore, demanded and it was proposed to impose penalty on them under Rule 9(2), 52A read with Rule 173Q of the Central Excise Rules. The case was adjudicated by the Collector of Central Excise, Meerut under the Order -in -original No. 24/Collector/95 dated 23.3.95. On appeal filed by the appellants, the order of the Collector was set aside by the Tribunal and the Collector was asked to readjudicate the case and to pass a fresh order.

(3.) ON re -adjudication, the impugned order was passed by the Commissioner of Central Excise by which he confirmed the demand of Rs. 8,17,290/ - and adjusted the amount of Rs. 70,000/ - deposited earlier by the appellants against the amount confirmed. A penalty of Rs. 8,70,290/ - was also imposed on the appellants under Rule 9(2), 52A read with Rule 173Q of the Central Excise Rules and a penalty of Rs. 25,000/ - was also imposed on C.O. Rajesh under Rule 209A of the Central excise Rules, 1944. It was argued on behalf of the appellants that they are having a vertical shaft kiln and licenced capacity of the factory is 9000 MT and they could not have produced excess quantity which is alleged to have been removed clandestinely. It was admitted that there was clandestine clearance of 10424 bags for which they have agreed to deposit the duty of Rs. 70,000/ - which was paid by them during the earlier proceedings when they caine before the Tribunal. Therefore, they are challenging the production of balance quantity. It was also pointed out that for 3750 bags of cement which were stolen and for which FIR was lodged, that has been separately settled under KVS Scheme. It was argued that in the show cause notice, numbers of cement bags dispatched as per parallel register which are shown to have been clandestinely removed are based on the figures of the register of cement filling and cement production register. It was argued that cement filling register shows datewise packing loading and despatch of the cement bags along with the name of the driver and this has been used for making payment for packing to the contractor. Cement production data register is a register which shows that details of production and clearance maintained by the labourers for making payment to them and this cannot be used as an authentic document for showing clandestine removal. In his statement dated 31.3.92, Shri C.O. Rajesh in reply to question that on 7.1.92 the central excise officers resumed a register from their offices for the period 1.11.91 to 7.1.92 maintained for packing, loading and dispatch of the cement on different dates. What you have to say that for what purpose, it is maintained and who maintained. In reply, it was stated that this register is maintained date wise for calculating the wages of labour for packing and loading of the cement in truck and payment is made to the labour as per this register. This register and payment vouchers are prepared by Shri Bahadur Singh as per direction of Shri C.S. Gupta. In his statement dated 10.3.92, Shri Chander Shekhar Gupta in reply to question No. 11 to the effect that on 7.1.92 the excise officers resumed the register from the office of the factory in which datewise information about the packing, dispatch and loading etc. of cement is given. This register is shown to you. The reply was that this register has been prepared to keep the accounts and work done by contractors. The entries made in this register appear to pertain about the packing, loading and dispatch of cement. In reply to question No. 12, he stated that this register is written by the clerk on duty, who deals with the work of contractor. It was argued that private records maintained by the labourers cannot be used for working the duty for clandestine removal as these are not evidence for clandestine removal. Reliance was placed on the following decisions: 1. Gurpreet Rubber Industries v. CCE, Chandigarh (Tribunal), where it was held that note book maintained by a casual worker containing entries of production not to be relied upon to establish clandestine removal unless supported by other evidence such as installed capacity of factory, raw -material utilization, labour employed etc. 2. CCE, Meerut v. Raman Ispat Ltd. , where it was held that proceedings were rightly dropped by the Commissioner on the ground that the department collected no material to prove the authenticity of the seized private note books and for failing to trace/examine material witnesses. 3. CCE, Coimbatore v. Velavan Spinning Mills. where it was held that private note books and some statements relied by Revenue -Figures do not tally with seized private note books and no systematic method of maintaining records, noted. 4. Bearing Manufacturing Co. v. CCE, Vadodara, 2000 (123) ELT -1148 (Tribunal);, where it was held that charge of clandestine removal based only on private records maintained by workers for their own purpose not sustainable when consumption of raw material to produce goods alleged to be clandestinely removed not actually proved and the fact of clandestine removal not otherwise established.