TMI Blog1984 (4) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... 1975 passed by the Collector of Central Excise, Bombay, by which he directed recovery of duty on certain quantities of P.V.C. films and also imposed a penalty of ₹ 50,000 under Rule 173Q and a further penalty of ₹ 1,000 under Rule 52A of the Central Excise Rules on the firm. 3. The above two appeals preferred against the above said two orders of the Collector before the Central Board of Excise Customs statutorily stood transferred to the Tribunal under Section 35-P(1) of the Central Excises and Salt Act, 1944. 4. As the appellants are sister concerns, the points of law involved in both the appeals being identical and at the request of the learned Advocate, Shri M. Ganeshan in both the appeals, and the learned Departmental Representative, Shri N.K. Pattekar, the two appeals were clubbed together and were heard together and hence this common order. 5. The appellants in Appeal No. 1/75 (to be referred to as Mills hereinafter) were issued with a show cause notice dated 4-7-1973 alleging that (i) on 10-1-1973 they removed 169 bundles containing 342 rolls admeasuring 9807.00 L.Mts. Flexible PVC films [Tariff Item No. 15A(2)] valued at ₹ 50,484/- alongwit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and they were inadvertently loaded into the truck due to negligence on the part of the dispatch clerk who was supervising the loading operations; (ii) employees handling excise work were housed in the factory of Messrs Amartara Industries. Under the procedure followed by them regarding the records of production in Excise books, the production report of one particular day was prepared in the evening the same day and seat to the Excise department next day morning when it was entered in the excise record. The 110 rolls mentioned in the notice which were manufactured on 10-1-1973 would have been entered in the excise record on 11-1-1973. The goods in question were however urgently required by their customers and hence had to be despatched immediately after production, before they could be entered in the excise books. The omission to be entered in the excise books is an error of a technical nature and they may be pardoned. (3) The 200 metres of Laminated PVC Film were not cleared at all. The apparent shortage is attributable to duplication of production record. (4) The list as per Appendix (A) prepared by the Central Excise Officers is based on personal memo books of the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how cause notice the Plastics Ltd. contended inter alia that the action initiated against them after the expiry of 6 months from the date of commission of the alleged offence is not maintainable by reasons of the provisions of Section 40(2) of the Central Excises and Salt Act, 1944 (to be hereinafter referred to as the Act ). They denied having produced and cleared without payment of duty 14886.60 kgs. of Rigid PVC films and 6532.30 kgs. of all coloured PVC films between 19-6-1972 to 20-11-1972. They further contended that the statement at page 161 of the file was prepared by the Excise clerk Mr. P.G. Dharmapal and at that time he was the main person instigating agitation among every member which resulted in subsequent strike and lockouts in the company. They have reason to believe that the said Mr. Dharmapal planted the above fictitious statement only to create problems for the management. It is then contended that on receiving the statement from Dharmapal, Shri S.S. Patil who knew nothing about what goods were being produced and/ or cleared until the excise clerk brought him the statement supported by production slips must have addressed a note to the Managing Director. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, Shri Ganeshan relied on a decision of the Supreme Court, in Public Prosecutor, Madras v. R. Raju Another , 1978 E.L.T. (J 410) and also on two decisions, one reported in 1978 E.L.T, pages 556 M/s Hyderabad Allwyn Metal Works Ltd. v. Collector of Central Excise, Hyderabad, and the other reported in 1981 ECR page 86-D (Madras) = 1984 (16) E.L.T. 82 (Mad) , A.P. Armugaswamy v. Deputy Collector of Central Excise . The decisions relied on by Shri Ganeshan do support his contention that initiation of proceedings after the expiration of six months from the date of accrual of cause of action is barred under Section 40(2) of the Act as it stood prior to its amendment in May, 1973. 10. Shri Krishan Kumar assisted by Shri N.K. Pattekar, Departmental Representative did not dispute the above legal position. He, however, contended that the show cause notice in both the cases were issued well within the period of 6 months from the date of knowledge of the commission of offences by the appellants, and therefore, the show cause notices are valid in law. 11. Having regard to the rival contentions, it is necessary for us to ascertain as to when exactly cause of action accrued in each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is provision is clear that no statutory functionary under the Act can take any proceeding or institute a suit or prosecute for an alleged offence any person who failed to do anything which he was ordained under the Act to do if the act complained of is beyond the period of six months from the date when action is initiated. This limit of time is positive and inescapable. After the expiry of this period of time, even though there is an apparent cause of action as is seem from the record or from the materials available, such a cause of action cannot be furthered by any overt action such as a suit, prosecution or other legal proceeding under the Act. The words anything done or ordered to be done under this Act is all embracing and would include any statutory duty which a person has to perform under the Act. One such statutory duty which a licensee under the Act has to do is to pay the excise duty over the stock removed from the warehouse. If he unauthorisedly removes the same without subjecting such goods to excise duty and without accounting for such duty in any manner and in the result evades such duty, then the cause of action to bring to book such action of the delinquent license ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered each of the allegations separately and had given cogent and convincing reasons for not accepting the contention of the appellants. The annexure to the show cause notice discloses that on 11-1-1973 officers of the Central Excise (Prev.) Divn. Headquarters, Bombay, had kept close watch in the vicinity of Mills and about 15:30 hrs. they noticed a truck bearing No. DLL 9041 came out of the said factory and the same was intercepted. It was found to contain consignment of flexible PVC films. Shri Kannan who was accompanying the said truck produced a Central Excise gate pass No. 35 dated, 10-1-1973 and a proforma invoice. The invoice did not contain any Sr. No. and date of issue. The Officers further found 8 bundles containing 29 rolls and 5 bundles containing 19 rolls were not covered by any gate pass. Their visit to the godown and verification of the stock with reference to the Central Excise records also disclosed that 200 metres of flexible PVC laminated materials were not found in the bonded store room. Verification of R.G. 1 register also disclosed that the goods covered by gate passes bearing Nos. 35 and 36 were not accounted for. The appellants offered their explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we reject the contention of Shri Ganeshan that there was only a technical breach which did not call for confiscation of the goods. 18. Shri Ganeshan for the appellants next contended that the burden of establishing the allegations or charges made against the appellants rests solely on the department and that the department has miserably failed to discharge that burden. According to Shri Ganeshan there was no sufficient evidence to justify the conclusions reached by the learned Collector that the charge or the allegations have been established. 19. As the department is not relying on any statutory presumption, the burden certainly rest on the department to establish by satisfactory evidence the allegations or the charges levelled against the appellants. But then the contention of Shri Ganeshan which has the implication that the department is required to establish the guilt beyond reasonable doubt cannot be accepted as correct. There is a considerable difference between adjudication proceedings and prosecution. Strict rules of evidence are not applicable to adjudication proceedings. The nature and extent of proof required in an adjudication proceedings is different from the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial has been placed before us to accept the said explanation. Refusal on the part of the learned Collector cannot be considered in the circumstances of the case as either arbitrary or unjust. It is higlily improbable and unbelievable that by inadvertence or by negligence, certain goods would be loaded into a lorry without a proper gate pass. It is not the case of the appellants that the person in charge of loading is altogether new to the job and is ignorant of the procedural requirement. 21. The learned Collector in our view is also justified in not believing the explanation offered with regard to the clearance of 200 metres of laminated PVC films. From the material placed on record it is seen that there was Production Engineer in charge of production. When there was such a highly qualified person in charge of production, the explanation of the appellants that inadvertently one more production report was prepared on 22-12-1972, though in fact there was no production of 200 metres of laminated PVC on that day cannot be accepted. 22. Shri Ganeshan urged that having regard to the gravity of offence, the imposition of penalty of ₹ 50,000 under Rule 173Q and ₹ 2,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise officers have not recorded statements of any -of the persons connected with Ajay Industrial Packaging Pvt. Ltd. He therefore submitted that the learned Collector was unjustified in holding that the appellants clandestinely removed the above said two quantities of Rigid PVC Films. 25. Shri Krishan Kumar for the department however, contended that the allegations against the appellants are based on the documentary evidence found in the records of the appellants firm. They were not concocted by the department. The contention of the learned Advocate that Shri Dharampal was a Union leader and he intended to create problems for the firm and that he created fictitious documents have not been substantiated. Shri Krishan Kumar further urged that the letter dated 30-11-1972 was addressed to the Managing Director and it bears the initial of the accountant Mr. Patil. This letter coupled with the statements established beyond doubt of the production as well as clandestine removal. In the said circumstances, according to Shri Krishan Kumar the learned Collector was justified in holding that the said charge has been established. 26. We have carefully considered the submissions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o interfere with the finding of the learned Collector. 27. The next charge against the appellants was that they had removed 262 rolls admeasuring 26200 L. Meters of flexible PVC film on 27-5-1971 without determining and paying Central Excise duty and without following the procedure regarding production, storage and clearance of goods as required under the various provisions of the Central Excise Rules, 1944. In their reply dated 31-3-1975, the appellants had stated that 262 rolls were cleared under Gate Pass No. 475, dated 27-5-1971 and duty thereon has been duly debited as per Entry No. 229, dated 27-5-1971, in Part II of R.G. 23. They even contended that the department had made the above allegation without verifying the records. But then, in their letter dated 4-4-1975 addressed to the Collector of Central Excise, the appellants had stated that they have erroneously linked the removal of 262 rolls of flexible PVC films under lorry receipt No. 37969 with Gate Pass No. 475, dated 27-5-1971 inadvertently and in this letter they sought to explain the lorry receipt dated 27-5-1971 bearing No. 37969 by stating that on 27-5-1971 they cleared 262 rolls after debiting the correct duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of ₹ 50,000 under Rule 173Q and ₹ 1,000 under Rule 52-A of the Central Excise Rules are harsh and unjust. Shri Ganesban urged that the management was unaware of the fictitious documents prepared by the disgruntled excise clerk. There was only a case or removal of 262 rolls. In the circumstances the learned Collector according to Shri Ganeshan was not justified in imposing a heavy penalty on the management. 30. The contention of Shri Gineshan that the management was unaware of the records maintained in their office cannot be accepted. We were unable to accept the contentions that Shri Dharmapal planted fictitious documents. We also rejected the plea that accountant signed the statement in a routine way. In the said circumstances the contention that the management was sought to be made liable on the basis of the documents of which they were unaware cannot be accepted. 31. Shri Ganeshan did not contest the legality of the penalty, in the sense that such a penalty could not be imposed under law. His contention was that the penalty imposed has no relation to the gravity of the offence. We are unable to agree with this contention also. The clandestine activities of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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