2011 (8) TMI 24 - SC - Central Excise

Demand for excise duty upheld where clandestine removal of excisable goods with intent to evade duty was proven

Commissioner of Central Excise, Mumbai Versus M/s. Kalvert Foods India Pvt. Ltd. & Ors.

SC upheld demand for excise duty, finding clandestine removal of excisable goods as non-excisable with intent to evade duty. The Court held statements ... Clandestine removal of excisable goods as non-excisable goods with intent to evade payment of excise duty - Classification of goods under brand name - Demand - articles of assorted jams, pickles, squashes, cooking sauces, chutneys, syrups, synthetic vinegars - Classification - there is no allegation of threat, force, coercion, duress or pressure being utilized by the officers to extract the statements which corroborated each other - HELD THAT:- It was observed by the Tribunal that it could be said that an attempt was being made to clear those goods in tempo in a clandestine manner, when the company representative produced the invoices and other relevant documents in respect thereof - since there was clandestine removal of excisable goods, the period of limitation in the present case would have to be computed from the date of their knowledge, arrived at upon raids on the premises - It was also stated that in respect of all products both the 'Product mark' and 'Brand name' would appear side by side on all the labels, cartons etc. and that the 'House mark' is used generally as an emblem of the manufacturer projecting the image of the manufacturer, whereas 'Brand name' is a name or trade mark either unregistered or registered under the Act. - it is clear that what was being used by the respondent under the expression 'Kalvert' was a 'Brand name' and not a 'House mark' as sought to be alleged by the respondent and has been wrongly accepted by the Tribunal - Decided against the assessee. Issues Involved:1. Clandestine removal of excisable goods.2. Classification of goods under brand name for excise duty.3. Validity of statements recorded under Section 14 of the Central Excise Act, 1944.4. Determination of the period of limitation for excise duty evasion.Detailed Analysis:1. Clandestine Removal of Excisable Goods:The primary issue revolves around the clandestine removal of excisable goods by the respondent company without payment of Central Excise Duty. The adjudicating authority, Commissioner of Central Excise, Mumbai, found that the respondent company, with the connivance of its directors, deliberately attempted to pass off excisable goods as non-excisable goods to evade excise duty. This was evidenced by the seizure of unaccounted finished excisable goods from the company's premises and its dealers, use of parallel sets of invoices, and recovery of a serially numbering machine and blank invoices. The Tribunal, however, set aside these findings, which was deemed erroneous by the Supreme Court.2. Classification of Goods Under Brand Name for Excise Duty:Another critical issue was whether the goods manufactured by the respondent were excisable under a brand name. The Tribunal held that the goods were not excisable as they were not packed in containers under a brand name. The Supreme Court disagreed, stating that the respondent's products were sold under the brand name 'Kalvert,' which qualifies as a brand name under the law. The Tribunal's interpretation that 'Kalvert' was a 'House mark' and not a 'Brand name' was incorrect. The Supreme Court clarified that a brand name does not need to be registered to be considered as such for excise purposes.3. Validity of Statements Recorded Under Section 14 of the Central Excise Act, 1944:The respondents argued that the statements recorded under Section 14 of the Central Excise Act were retracted and hence unreliable. The Supreme Court found no evidence of coercion or duress in obtaining these statements. The statements were corroborated by other evidence and were considered voluntary. The Managing Director's voluntary payment of Rs. 11 lakhs towards excise duty further substantiated the credibility of these statements.4. Determination of the Period of Limitation for Excise Duty Evasion:The Supreme Court addressed the issue of the period of limitation for raising the duty demand. Given the clandestine removal of excisable goods and suppression of facts by the respondents, the extended period of limitation was applicable. The period of limitation would commence from the date of discovery of the evasion during the raids, allowing the revenue authorities to raise the demand within the extended period.Conclusion:The Supreme Court concluded that the respondent company was guilty of clandestine removal of excisable goods and evasion of excise duty. The goods were indeed excisable as they were sold under the brand name 'Kalvert.' The statements recorded under Section 14 of the Central Excise Act were valid and reliable. The extended period of limitation was applicable due to the suppression of facts by the respondents. Consequently, the Supreme Court set aside the Tribunal's order and restored the order of the Commissioner of Central Excise, Mumbai, confirming the duty demand and penalties. The appeals were allowed, and the parties were directed to bear their own costs.