DIVINE SOLUTIONS Vs. CCE

JUDGEMENT

(1.) THIS appeal is against a demand of duty of Rs. 1,10,250/ - and a penalty of Rs. 27,500/ -. In the impugned order, the lower appellate authority found that the appellants had manufactured 21 computers, valued at Rs. 7,35,000/ -, and cleared the same without payment of duty during the period July 1995 to August 1996 in contravention of various provisions of the Central Excise Rules, 1944. It was also found that they were liable for penalty under Rule 173Q.

(2.) IT appears from the records that one Shri R. Suresh Kumar and one Shri P. Manoharan formed a partnership firm by name 'Divine Solutions' on 30.10.1996. In May 1999, when this partnership was in existence, it appeared to the department that the partners had indulged in clandestine assembly and the sale of computer systems till October 1996. The connected investigations resulted in the issue of a show -cause notice, which demanded the above amount of duty on 21 computers found to have been clandestinely manufactured and cleared during July 1995 to August 1996. Shri Suresh Kumar, one of the partners, had died by then. Hence the surviving partner, Shri P. Manoharan replied to the show -cause notice. No copy of this reply is available on record. However, in the order of adjudication, there are references to the statements given by both the partners under Section 14 of the Central Excise Act read with Section 108 of the Customs Act. Both the partners admitted that they had manufactured computers and cleared the same without payment of duty during the above period. On the basis of this admission of guilt, the lower appellate authority sustained the demand of duty, while vacating the penalty imposed on the party under Section 11AC of the Central Excise Act. The subsisting penalty of Rs. 27,500/ - is under Rule 173Q of the Central Excise Rules.

(3.) LEARNED consultant has challenged the show -cause notice on the ground that the above partnership firm was not in existence after the death of one of the partners. The demand of duty has also been challenged on the same ground. It has also been submitted that, in a subsequent statement dated 12.4.2000 given by the surviving partner, the earlier confessional statements had been retracted. However, learned consultant has not been able to produce a copy of Shri Manoharan's reply to the show -cause notice. In the circumstances, adverse inference will have to be drawn against the appellants. Moreover, the retraction, made in April 2000, of earlier statements made in May 1999 is too belated to be accepted as genuine. In the result, the confessional statements would hold the field and there is no need to search for evidence. The arguments to the contra cannot be accepted and, for that matter, the case law cited in the memorandum of appeal is not relevant.