QUALITY EXPORTS AND CHEMICALS Vs. CEGAT

JUDGEMENT

(1.) The petitioners are partnership concern engaged in manufacturing of menthol and DMO and are registered with the Central Excise Department for the same. On 12.07.1995 the Central Excise Officers inspected the premises of the petitioners and found that the petitioners were clandestinely clearing the excisable goods manufactured by them and there was excess stock of finished goods which was not accounted for in their books. The department issued notices proposing a demand of Rs. 53,55,862.15 paise as central excise duty on clearing of goods valued at Rs. 2,71,54,179.00 without paying excise duty, proposing to demand central excise duty of Rs. 33,22,722.00 on the basis of assumption of abstract of menthol produced and cleared by the petitioners during June and July, 1995 and further calling upon them to show cause why proposed penalty be not levied. The Adjudicating authority passed various orders whereby the goods worth Rs. 99,39,334.00 seized from the petitioners on 12.07.1995 were directed to be confiscated, demand of duty of Rs. 53,55,862.00 was confirmed penalty of Rs. 55,00,000/- was imposed on the petitioners and further penalty of Rs. 10 lacs each were imposed on Shri Mukul Gupta partner of M/s. QEC. and on Smt. Bandana Gupta and Smt. Veena Gupta partners of M/s. Quality Chemicals and M/s. Flavour and their units under Section 209A of the Act and a penalty of Rs. 10 lacs was imposed on one Alok Kumar Tewari proprietor of M/s. West Roadways under Section 209A. Against the orders passed by the Adjudicating authority the appeals were filed which were dismissed by respondent No. 1, Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi vide order dated 14.05.1999 [1999 (112) E.L.T. 84 (Tribunal)] as contained in Annexure 4 to the writ petition. Thereafter the petitioners moved various applications under Section 35C(2) of the Central Excise Act for rectification of the mistake in the order passed under Sub-section (1). These applications were originally heard by a Bench comprising of two members. There was difference of opinion between the members who passed the orders dated 27.09.1999. Thereafter the matter was referred to the President of the Tribunal who passed the order dated 25.01.2000. In view of the majority view of the Tribunal the rectification of mistake applications were rejected by the Tribunal. By filing the present writ petition the petitioners have made following prayers :

(2.) The main ground on which the aforesaid prayers have been made is that the entire demands have been raised and confirmed against the petitioners on the basis of surmises and presumption; that they cleared the goods surreptitiously and clandestinely; that the G.Rs found on 12.07.1995 were not fake and the consignors and consignees names were there on the G.Rs. and the officers did not make any enquiry from the consignors and consignees and wrongly presumed that the goods belonging to the petitioners factory were being cleared under the cover of the said G.Rs in order to avoid payment of Central Excise duty; that the finding of the authority was that total value of the excisable goods manufactured and cleared on the basis of the G.Rs. worked out at Rs. 2,71,54,179/- on which central excise duty payable was Rs. 53,55,862/-, yet additional demand of Rs. 33,22,722/- was made separately even though the said amount was included in the demand of Rs. 53,55,862/-. The goods produced and cleared after 14.06.1995 to July, 1995 could not be covered by the G.Rs, which were seized on 12.07.1995 which pertains to the period from 14.10.1993 to 14.06.1995; that on the basis of assumptions that by processing mentha oil by freezing method 60-70 kg. of menthol is obtained and 30-40 kg. of DMO is generated as by-product is imaginary and not based on scientific method; that a specific plea was taken that the entire demand raised in the instant case was time-barred but this question has not been considered by the Tribunal while deciding the appeal and that the rectification of mistake applications have been wrongly rejected.

(3.) The respondents have contested the petition and in their counter affidavit they have stated that the Tribunal while dismissing the appeals have considered various circumstances holding that the three units i.e. unit of the petitioners and two alleged Trading units are being operated by the petitioners and as a matter of fact the two Trading units were non-entity; that the team visiting the premises of the petitioners on 12.07.1995 conducted physical verification of the finished goods and raw materials and the presumptions drawn on the material found during the inspection were justified. The petitioners did not submit satisfactory reply to the show cause notice and no evidence was adduced to indicate that the goods found in the premises of the petitioners belonged to some other persons. The goods found in the premises have rightly been scribed to the petitioners. The Tribunal after examining the arguments raised by the parties rightly rejected the rectification of mistake applications as being not maintainable.