1999 (6) TMI 181 - AT - Central Excise

Tribunal confirms duty recovery, penalties upheld, MD penalty set aside, Rs. 20 lakhs appropriated.

JALMADHU CORPORATION Versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR

JALMADHU CORPORATION Versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR - 1999 (114) E.L.T. 883 (Tribunal) Issues Involved:1. Short payment of duty and extended period of limitation.2. Reliance on private records maintained by the Production Manager.3. Non-testing of samples to determine fly ash content.4. Cross-examination of key witnesses.5. Allegation of clandestine removal and manipulation of records.6. Validity of statements and evidence provided by the Department.7. Personal penalty on the Managing Director.Issue-wise Detailed Analysis:1. Short Payment of Duty and Extended Period of Limitation:The appellants were accused of short payment of duty amounting to Rs. 27,97,284 and faced penalties. The Department invoked the extended period of limitation, arguing that the appellants had clandestinely removed goods with less than 25% fly ash content, thus wrongly availing the benefit of Notification No. 38/93. The appellants contended that the registers relied upon by the Department were not maintained by them and lacked authentication.2. Reliance on Private Records Maintained by the Production Manager:The Department relied on private records (D-series registers) maintained by the Production Manager, Noor Mohammad, to allege that the appellants had manufactured and cleared goods with less than 25% fly ash. The appellants argued that these registers were unauthorized, lacked signatures, and were not reliable. However, the Tribunal found that these records were admissible as they were recovered from the Production Manager's cabinet and corroborated by statements from other employees.3. Non-testing of Samples to Determine Fly Ash Content:The appellants argued that no adverse inference regarding the fly ash content could be drawn without testing samples. The Department countered that it was not feasible to analyze the product for fly ash content and relied on records instead. The Tribunal agreed with the Department, noting that the Board had clarified the difficulty in analyzing fly ash content and prescribed record maintenance as a reliable method.4. Cross-examination of Key Witnesses:The appellants sought cross-examination of key witnesses, including Shri P.S. Ray and Noor Mohammad, which was not allowed. The Tribunal held that it was not necessary for the adjudicating authority to allow cross-examination in all cases, especially when the statements provided sufficient basis for conclusions.5. Allegation of Clandestine Removal and Manipulation of Records:The Department alleged that the appellants manipulated records to show higher fly ash content and clandestinely removed goods. The Tribunal found that the private records maintained by the Production Manager were reliable and showed the correct state of affairs. The discrepancies between private records and statutory records were noted, but the Tribunal upheld the Department's findings of clandestine removal.6. Validity of Statements and Evidence Provided by the Department:The Tribunal considered the statements of various individuals, including Shri P.S. Ray and transporters, which corroborated the Department's case. The Tribunal found no infirmity in relying on these statements, noting that they were not retracted and provided a clear picture of the appellants' activities.7. Personal Penalty on the Managing Director:The Tribunal set aside the personal penalty of Rs. 10,000 imposed on the Managing Director, Shri Kishore G. Motwani, as no allegation of abetment under Rule 209A was established against him.Conclusion:The Tribunal confirmed the recovery of Rs. 27,97,284 and the appropriation of Rs. 20 lakhs already deposited by the appellants. The penalties on the appellant company were upheld, but the personal penalty on the Managing Director was set aside. The appeals were disposed of accordingly.