Case Law Details
Commissioner, Central Excise, Customs & Service Tax, Sonepat & Ors Vs Amit Decorative Plywoods Pvt. Ltd. & Ors. (Delhi High Court)
Settlement Commission could not have returned these findings, which could only have emerged from a formal adjudicatory process. The findings of the Settlement Commission, amount, in effect, to ignoring the statements of suppliers of raw material, the evidence of the buyers of the finished goods, admissions of various personnel of respondents, including their directors Manish Kedia and his father, Raghunath Prasad Kedia, as well as the computer printouts. The submission, of Respondents No.1 and 2 – which was, somewhat disquietingly, endorsed by the Departmental Representative who appeared before the Settlement Commission – that the only evidence of clandestine removal, without invoices, of excisable goods, by them, was contained in the computer printouts, is, on the face of it, incorrect. A bare reading of the Show Cause Notice reveals that, apart from computer printouts, the allegation that Respondents No.1 and 2 were clearing the finished goods, unaccompanied by invoices, was supported by (i) the statements, amongst others, of Govind Pareek, Dhanraj Purohit, Amar Aggarwal, Manish Kedia and Raghunath Kedia, (ii) evidence of receipt of unaccounted raw material, in the form of the statements of the material suppliers, (iii) the recovery of unaccounted cash from the premises at 246, Gate No. 1, Deepali, Pitampura and 2909, Gali No. 4, Chuna Mandi, Paharganj, (iv) shortage of finished goods, in the premises of Respondent No.1, vis-à-vis the record and balance in the RG-1 register, (v) seizure of unaccounted finished goods, from the goodown of Respondents No.1 and 2 at 548/4, Swarn Park, Udyog Nagar, Mundka and (vi) the recovery of kachcha parchis, where under such removals were allegedly effected. The impugned Final Order of the Settlement Commission completely ignores this evidence. Apropos the computer printouts, the Settlement Commission has also failed to note the fact that the figures in the computer printouts had been compared with other records and had been found to tally. The Settlement Commission could not have held that the Revenue had failed to adduce evidence – particularly in the context of production capacity of Respondents No.1 and 2 – as the occasion to produce any such evidence would have arisen only during adjudication proceedings.
We are also unaware of any law, which entitles Respondents No.1 and 2 , to compute demand, for the period not covered by the diaries, on a “pro rata” basis. Removal of excisable goods does not take place on “pro rata” basis, but in actual fact, and duty, on such removals has also, therefore, to be paid on actuals, and not on “pro rata” basis.
The error, in the perception of the Settlement Commission, regarding its jurisdiction, is, perhaps, most starkly underscored by the findings, returned by it, in the impugned Final Order, with respect to the production capacity of the units of Respondents No.1 and 2 . The production capacity of Respondents No.1 and 2 never constituted a part of the Show Cause Notice, dated 16th January, 2013, and was cited by Respondents No.1 and 2 in their defence. The onus to establish that, during the period of dispute, their production capacity was insufficient to maintain the allegation of clandestine removal and under invoicing, as contained in the Show Cause Notice, lay, therefore, squarely on Respondents No.1 and 2 . As no adjudication took place, neither did Respondents No.1 and 2 discharge this onus, nor did any occasion arise, for the Revenue to lead any evidence, or, in any other manner, seek to disprove the same. In these circumstances, we fail to appreciate how the Settlement Commission could have accepted, as gospel truth, the submissions, of Respondents No.1 and 2 , regarding their production capacity, especially as there is not an iota of evidence, cited by the said respondents, regarding the number of machines which were installed in their premises during the period of dispute.
The findings recorded in the impugned Final Order, as contained in paras 24.1 to 24.4 thereof (supra), in fact, amount to a truncated adjudication of the Show Cause Notice, without the trappings of the regular adjudicatory process, which would have included admission of the evidence cited in the Show Cause Notice, rebuttal thereof by the respondents, adducing of evidence by the respondents in their favour and rebuttal thereof by the Revenue. Such a summary adjudication, as has been undertaken by the Settlement Commission, is unknown to the Act, or to any other law governing the field.
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