2005 (98) ECC 364 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-B

Shri V.K. Agrawal, Member (T) and Shri P.S. Bajaj, Member (T)

Majestic Auto Ltd.

Versus

CCE, Ghaziabad

Appeal No. E/642/2004-B

[Arising out of Order-in-Appeal No. 462-CE/GZB/03 dated 29.10.03 of the Commissioner of Central Excise (Appeals), Ghaziabad]

Final Order No. 617/04-B, dt. 20.7.2004, Certified on 13.8.2004

Demand and Penalty (Excise)

Clandestine Removal -- Onus -- Shortage of entries of finished vehicles -- The onus was on the assessees to prove as to how the shortages of the fully finished/manufactured two wheelers took place. The only irresistible conclusion which could be drawn, therefore, was that those had been cleared/disposed of without payment of duty, when the assessees failed to offer any plausible/tangible explanation in respect thereof. Therefore, the duty demand in respect of short found vehicles had been rightly confirmed against the assessees.

Confiscation and Redemption fine

Un-accounted vehicles seized -- Shortages and excesses had not been satisfactorily explained by assessee in their statements -- Hence, the confiscation of the un-accounted vehicles had also been rightly ordered and redemption fine for getting those redeemed had also been correctly imposed. -- Sections 5, 34 of CER.

Bank Guarantee

Assessee contended that Bank guarantee encashed without giving any notice -- Is devoid of force of law, for the simple reason, that this guarantee was furnished by the assessee at the time of getting the provisional release of the goods, and it is not their case that they produced those goods before the competent authority at any stage after the release. The Bond furnished by them authorized the authorities to get the guarantee bond encashed and as such no prior notice was required to be given to the assessees for that purpose.

PRESENT :

Shri S.V. Arya, Advocate for the appellant.

Shri Vikas Kumar, SDR for the respondent.

Cases Cited :

1. CCE, Patna v. Universal Polythelene Industries, 2001 (130) ELT 228 (Tri.-Kolkata) [Para 6]

2. Emmtex Synthetics v. CCE, New Delhi, 2003 (151) ELT 170 (T)......................... [Para 6]

3. India Metal Works v. CCE, Pune, 1999 (108) ELT 745 (Tri)............................... [Para 6]

4. Maruti Udyog Ltd. v. CCE, New Delhi, Final Order No. A/840-44/98-NB (DB) dated 11.9.98 [Para 7]

5. Nav Bharat Paper v. CCE, Ghaziabad, 2004 (95) ECC 294 (T)........................... [Para 6]

Per : P.S. Bajaj

In this appeal, the appellants have contested the correctness of the impugned Order-in-Appeal vide which the Commissioner (Appeals) has upheld the Order-in-Original of the adjudicating authority, directing confiscation of the un-accounted goods and confirming the duty demand with penalty of equal amount payable with interest on the short found goods (Two Wheelers as detailed therein).

2. The appellants are engaged in the manufacture of two wheelers (Scooters and Mopeds). On carrying out physical verification of their finished goods, 276 pieces of different models of two wheelers were found in excess as compared to stock entered in the RG-I register and 365 nos. of two wheelers involving duty of Rs. 6,23,391 and Cess of Rs. 4,870 were found short. The statement of Shri Bhawnesh Vij, General Manager was recorded at the spot but he could not give any plausible explanation for these discrepancies in the stock. He however, got time to explain the shortage and excess of the stock by 21.1.2001. The excess found two wheelers were seized. On completion of investigation, show cause notice was served on the appellants proposing confiscation of the excess found vehicles, confirmation of duty in respect of short-found vehicles and imposition of penalty. The adjudicating authority confirmed the duty demand, and ordered confiscation of the seized vehicles and further imposed penalty on the appellants through Order-in-Original. The Commissioner (Appeals) has affirmed that order.

3. Ld. Counsel has contended that the excess and shortages of the vehicles was duly explained during the investigation through letter dated 14.3.2001 and computer print out was also submitted but the same has been ignored by the authorities below wrongly. He has also contended that there is no evidence regarding the clandestine removal of the vehicles by the appellants and as such no duty in respect of short-found vehicles could be legally confirmed. He has further contended that the encashment of the bank guarantee had been wrongly done without serving any notice on the appellants. Therefore, the impugned order deserves to be set aside.

4. On the other hand, Ld. SDR has reiterated the correctness of the impugned order.

5. We have heard both sides and gone through the record. So far as excess and shortages of the two wheelers detailed above detected at the time of carrying out physical verification of the finished vehicles lying in the factory premises of the appellants, is concerned, the same was not disputed by the appellants at the time of preparation of Panchnama, in the presence of third authorized representative, Shri Ashwani and independent witnesses. Even Shri Bhawnesh Vij, General Manager of the appellants-company could not offer any explanation at that time for the excess and shortages of the goods. He only sought time till 21.1.2001 for explaining the position. But on that date, he did not submit any explanation. It is only on 14.3.2001, the appellants sent a letter alongwith their alleged computer print-out to explain the excess and shortage. But the same had been rightly not accepted by the authorities below as it could easily be prepared later on to create evidence, in order to avoid penal action. It was sent only on 14.3.2001 after expiry of the period of 2 months from the date of physical verification conducted by the Central Excise Officers. Moreover, no supporting documents from where the print-out were taken, were submitted by the appellants. The correctness of the Panchnama wherein the details of the excess and short-found vehicles had been given, was never disputed by the appellants at the spot which was signed by their authorized signatory. The details of the vehicles, had been also given in Annexure appended to the Panchnama which is also to be taken as a part of the Panchnama. The mode adopted by the officers while carrying out the physical verification of the vehicles was also not disputed by the representative of the appellants, who was present at the spot. Therefore, the plea of the appellants that there was no shortage or excess of the vehicles in their premises, had been rightly not accepted by the authorities below.

6. In respect of the short found goods, it was not essential for the Department to prove the clandestine removal of the same by producing any positive evidence. The onus was on the appellants to prove as to how the shortages of the fully finished/manufactured two wheelers took place. The only irresistible conclusion which could be drawn, therefore, was that those had been cleared/disposed of without payment of duty, when the appellants failed to offer any plausible/tangible explanation in respect thereof. Therefore, the duty demand in respect of short found vehicles had been rightly confirmed against the appellants. Similarly, the confiscation of the un-accounted vehicles has also been rightly ordered and redemption fine for getting those redeemed had also been correctly imposed. The ratio of the law laid down in the following cases referred by the counsel is not attracted to the facts of the present case:

(i) India Metal Works v. CCE, Pune, 1999 (108) ELT 745 (Tri)

(ii) CCE, Patna v. Universal Polythelene Industries, 2001 (130) ELT 228 (Tri.-Kolkata)

(iii) Nav Bharat Paper P. Ltd. v. CCE, Ghaziabad, 2004 (95) ECC 294 (Tri. Delhi) : 2004 (165) ELT 564 (Tri. Delhi)

(iv) Emmtex Synthetics Ltd. v. CCE, New Delhi, 2003 (151) ELT 170 (Tri.-Delhi)

In those cases, the goods were found lying in the factory but were not entered in the RG-I register and for want of any evidence of removal of the goods, the charge of clandestine removal of those goods was not accepted by the Tribunal and the duty liability was set aside. The Tribunal also observed that charge of clandestine removal is a serious charge which is required to be proved by tangible evidence. But the observations made in all those cases by the Tribunal have no applicability to the case of the present appellants in the light of facts and circumstances detailed above.

7. The ratio of law laid down in M/s. Maruti Udyog Ltd. v. CCE, New Delhi decided vide Final Order No. A/840-44/98-NB (DB) dated 11.9.98, referred by the counsel, is also of no avail to the appellants. In that case, the production of the goods was entered in the RG-I register and the engine nos. were also entered in the computer and the assessee duly explained the excess and shortages of the vehicles and that explanation was accepted by the Tribunal. But in the instant case, the shortages and excesses had not been satisfactorily explained by the appellants.

8. The grievances of the counsel that the bank guarantee had been wrongly encashed without giving any notice to the appellants is also devoid of force of law, for the simple reason, that this guarantee was furnished by the appellants at the time of getting the provisional release of the goods, and it is not their case that they produced those goods before the competent authority at any stage after the release. The Bond furnished by them authorized the authorities to get the guarantee bond encashed and as such no prior notice was required to be given to the appellants for that purpose. The observations of the Tribunal in Indra Metal Works (supra) that the adjudicating authority wrongly straight-way appropriated the security amount of the assessee, is not attracted to the case of the appellants. The bond furnished by the appellants did not contain any condition for serving prior notice on them for encashment of the bank guarantee furnished by them.

9. In the light of discussion made above, we do not find any illegality in the impugned order, at all. However, keeping in view the facts and circumstances of the case, the redemption fine is reduced to Rs. 2 lakhs and penalty to Rs. 3 lakhs. But for these modification in penalty and redemption fine, the impugned order is upheld. The appeal of the appellants accordingly stands disposed of in these terms.

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