1991 (9) TMI 205 - AT - Central Excise

Admissibility of Civil Court Averments in Excise Duty Adjudication: Burden of Proof and Clandestine Activities

ROXY ENTERPRISES (P) LTD. Versus COLLECTOR OF CENTRAL EXCISE

The Tribunal considered the admissibility of averments from a civil court plaint in excise duty adjudication under the Central Excises and Salt Act, 1944. ... Appellants charged with clandestine manufacture of goods Issues:1. Interpretation of legal provisions regarding the admissibility of averments made in a civil court plaint in adjudication proceedings under the Central Excises and Salt Act, 1944.2. Determination of whether averments in a civil court plaint can constitute evidence when the civil suit is pending and issues are yet to be decided.3. Analysis of whether an averment in a pending civil court plaint can amount to an admission as per the Indian Evidence Act, 1872, and fulfill the requirements of constituting substantive evidence.4. Examination of the presumption of clandestine manufacture based on pleadings filed before a civil court and stock verification by bank officials.5. Consideration of the procedure for addressing a third member reference without deciding all issues with differences of opinion.Analysis:1. The reference application raised questions regarding the admissibility of averments made in a civil court plaint in adjudication proceedings under the Central Excises and Salt Act, 1944. The applicants sought clarification on whether such averments could be considered conclusive evidence despite the civil suit being unrelated to excise duty matters. The Tribunal was asked to determine the legal weight of these averments in excise duty adjudication.2. The case involved allegations of suppression of production and evasion of central excise duty by the appellants. The dispute centered around discrepancies in stock figures declared to a bank and not reflected in the appellants' official records. The Collector upheld the demand and imposed a penalty, leading to an appeal. The Tribunal deliberated on the burden of proof regarding clandestine manufacture and removal of goods, considering conflicting views on the Department's evidence and the appellants' contentions.3. The Tribunal faced a difference of opinion between Members on the burden of proof. While one Member emphasized the Department's obligation to prove clandestine activities conclusively, another Member held the appellants responsible for substantiating legitimate procurement of goods. The third Member concurred with the latter view, upholding the Collector's decision based on available evidence and the appellants' civil court plaint, which seemingly contradicted their claims.4. During the hearing, the appellants emphasized the settled legal principle that the burden lies on the Department to prove clandestine activities. They argued that the Tribunal erred in shifting this burden onto them and requested a reference to the High Court to clarify this legal issue. The respondent contended that no legal question arose, as the Tribunal's decision was based on factual findings and evidence analysis.5. Upon review, the Tribunal acknowledged the legal complexity of the case and the differing opinions on the burden of proof. Recognizing the need to clarify the legal position, the Tribunal reformulated the question for reference to the High Court. The revised question sought the High Court's opinion on whether the Tribunal was justified in concluding clandestine manufacture based on bank officials' stock verification and the appellants' civil court pleadings.