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TMI Blog2002 (6) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... in cash and that no central excise duty was being paid in respect of the cash component of the price. Accordingly, show cause notices were issued by the Collector of Central Excise, Indore to both the units proposing to reassess the goods treating the cash collection also as part of the assessable value and to recover the consequential short-levy. These show cause notices resulted in the passing of the adjudication orders wherein the duty demands were confirmed and penalties were imposed on the manufacturing firms, their officers and distributors of the firms. The details of the duty demands and penalties are mentioned hereunder :- Alfa Ceramics Date of show cause notice - 5-1-98/29-6-98 Date of impugned order - 22-11-99 Periods 11-12-97 to 31-3-98 - 1-4-93 to 30-11-97 and Demand of Duty - Rs. 69,29,676 + Rs. 8,24,691= Rs. 77,54,364 (Duty already Rs. 5,00,000/-) Penalty - Rs. 74,29,676/- Fine - Rs. 5,00,000/- Personal penalty : Shri V.K. Jain - Rs. 10,00,000/- Shri Shah Nawaz Mallique - Rs. 5,00,000/- Shri Sharik Malik - Rs. 5,00,000/- Shri Sushil Kumar Jain - Rs. 5,00,000/- Shri Mahendra Khandelwal - Rs. 50,000/- Shri S. Chordia - Rs. 50,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from all their buyers and not merely from their M.P. distributors. 5. The defence of the appellants before us is almost a repeat of the explanations offered before the Commissioner during adjudication. With regard to the charge of collection of part of the price in cash outside of the books of accounts and non-payment of duty on that component of the price, the contention is that the evidence regarding cash realisation by the appellant manufacturers is too thin and not sufficient to reach a conclusion that a well planned system of collecting part of the price outside of the books of accounts existed during the entire period of show cause notices. It is pointed out that the acknowledgement of cash receipt by the manufacturing firms is only in three cases. It has been pointed out that the rest of the evidence related only to the practice of the distributors with regard to their sales to dealers and it is contended that that evidence cannot be relied upon against the appellant manufacturers. It is also submitted that the evidence does not establish payment of part of the price by all the distributors/dealers. 6. The appellants have also canvassed a legal proposition that, since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence. He pointed out that the amounts to be collected in cash such as + 80, +110 were being shown in the price lists recovered from the distributors' and that cash collection was taking place at those rates, is evident from the distributors' correspondence with their dealers. Papers, showing receipts of cash established that down the trade chain of three tiers (manufacturer, distributor and dealer), cash collection was taking place and cash was moving up to the manufacturers. Ld. SDR has also pointed out that this arrangement has been clearly explained by the parties concerned. In this context, he referred to the testimony of Shri Khandelwal dealt with at page 6 of the impugned order, the testimony of Shri Vinod Kumar Jain, Constituted Attorney of the appellants-company reproduced at page 7 of the impugned order, the testimony of Shri Ramesh Chandra Kabra of M/s. Shanker Sanitation considered at page 8 of the impugned order etc. Ld. SDR also pointed out that there could be no doubt that the system of cash collection was prevalent throughout the notice period. He pointed out that the price lists for the period prior to 1993 also indicated additional amounts while the period of deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bill shows the rate 155/- whereas you have taken the payment @ 270/-. Why did you do so? Ans. I have seen the Bill No. 6280, dated 20-5-96 and having seen I have signed. As per the instruction of the dealer i.e. Shah S.P. Chordia. We have made the payment of Rs. 620/- by cheque and (1080-620-460) payment in cash has been given to them more than the amount of the bill. We have done so because we sell Alfa tiles only on this condition." (Page No. 8 of the impugned order) The testimony of Shri V.K. Jain, Constituted Attorney of the manufacturing firms has, in effect, only confirmed the state of affairs. The few receipts recovered from the distributors and containing the acknowledgement/receipt of cash payments by the appellant-manufacturer render the final confirmation to the allegation that part of the price was being collected in cash over and above the invoiced price. 11. The appellants' contention is that the evidence directly connecting them is too thin and is not sufficient to uphold the charge. This argument cannot find acceptance. To look for comprehensive evidence in a case of calculated fraud is to ask for the impossible. It is in the very nature of such misdeeds th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case in respect of all sales in other areas also. We, therefore, accept the appellant's submission that the demand cannot be extended beyond the sales to Madhya Pradesh. The differential duty in respect of sales to Madhya Pradesh has been computed by the appellants (and duty verified by the Revenue authorities) at Rs. 27,35,960/- for Alfa Ceramics and at Rs. 11,05,036/- for Globe Ceramics. 14. With regard to penalties, we find that the case of duty evasion due to fraud and suppression of facts remains fully established against the appellant-manufacturers. Offence of that nature calls for imposition of severe penalty. Until the enactment of Section 11AC of the Central Excise Act in 1996, penalty was imposable under Rule 173Q of the Central Excise Rules. The maximum penalty imposable under Rule 173Q is much higher than the mandatory penalty under Section 11AC. In these circumstances, it is of no relevance that the penalty has been imposed by the Commissioner under Section 11AC which was in force only for a part of the period covered by show cause notice. Law stipulated imposition of penalty during the entire period of demand and the law has to prevail. Therefore, we find no meri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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