S.S. ENTERPRISES Vs. CCE, KANPUR

JUDGEMENT

(1.) THE brief facts of the case are as follows: -

(2.) 1 On 3.8.93, officers of Central Excise intercepted a tempo loaded with 355 pairs of footwear. The driver of the vehicle produced Challan No 26 dated 3.8.93 issued by the appellants vis. M/s S.S. Enterprises Agra, which did not indicate the value of the said goods and the progressive value of footwear cleared by the party till date. The officers, on the same day, also visited the factory premises of the appellants and, in the presence of Sh. Mohd. Naseem, partner of the firm, checked the stock of goods and inspected the machinery installed in the factory. They found there a stock of 1454 pairs of fully finished footwear, 410 pairs of semi -finished footwear, 70 pairs of semi -finished bellies and 250 pairs of uppers of shoes. They also found a pasting machine installed in the factory. The officers got the goods and machine photographed and also drew samples of the footwears in the presence of Sh. Mohd. Naseem and two independent witnesses. They also recorded a statement of Sh. Mohd. Naseem under Section 14 of the Central Excises and Salt Act, 1944, wherein Sh. Naseem stated that his factory was not registered with the Central excise department or (as an SSI Unit) with the Director of Industries, that no declaration had been filed with the department, that the turnover of sales of footwear in 1992 -93 and 1993 -94 were respectively over Rs. 23 lakhs and over Rs. 17 and that the pasting machine was an electrically operated one. Sh. Naseem produced on challan book from which Challan No. 26 dated 3.8.93 had been issued. From all the information gathered by the officers, it appear to (sic) the appellants were engaged in the manufacture of footwear falling under Tariff Sub -Heading 6401.11 of the Central Tariff Schedule, with the aid of power. It further appeared to them that the 1454 pairs of footwear were kept without accountal for the purpose of clandestine removal and were therefore liable to be confiscated. They arrived at similar observation in respect of the 355 pairs of footwear which had been detained along with the vehicle earlier in the day. Accordingly, the officers seized the 1454 pairs and the 355 pairs of footwear under Section 110 of the Custom Act, 1962 as made applicable to Central Excise seizures. Subsequent enquiries revealed that the appellants had supplied footwear to M/s National Federation Industries Co -operative Ltd. (in short, BLC). Statement of the Manager of NAFIC Ltd. was recorded under Section 14 of the Central Excises and Salt Act, wherein he stated that NAFIC Ltd. had purchased footwears from the appellants during the years 1991 -92 and 1992 -93 and thereafter, in proof of which he produced photocopies of the invoices issued by the appellants. M/s BLC, by reply dated 5.8.93 to queries of the Central Excise department, stated that the appellants had supplied footwears to them during the years 1990 -91, 1991 -92 and 1992 -93. Later on, Sh. Mohd. Naseem submitted an affidavit along with copies of the balance sheets prepared by his Chartered Accountants. In the affidavit, Sh. Naseem stated that the statement of 3.8.93 had been made under duress and that, during 1989 -90 and 1990 -91, they had manufactured footwear only by hand process for 1 1/2 months, in addition to trading. Sh. Naseem further claimed in his affidavit that, during the visit to his factory by the officers on 3.8.93, no manufacturing activity was undertaken but only packing of the footwear purchased from the market was under way. After examining the contents of the affidavits and scrutinising the balance sheets and considering all other evidence gathered by the officers, the department concluded that the appellants were engaged in the manufacture of footwear since 1989 -90 with the aid of power and had clandestinely cleared footwear, valued at over Rs. 62 lakhs, during the period 1990 -91 to 1992 -93 without payment of Central Excise duty to the tune of Rs. 11,98,551.50.

(3.) WE have examined the records and heard both sides.