TaxTMI 
TaxTMI 
2000 (3) TMI 511
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....el, partner of the appellant-firm was recorded by the officers on that day. Statements of Shri H. H. Mithani partner of the appellant-firm was recorded later. Statements of partners of M/s. Apsara Agencies and M/s. Kothari Agenices - buyers of the appellants' products - were also recorded. 2.  Prior to 24-10-1989, Central Excise officers had recorded a statement of an executive of M/s. Lallubhai Ami chand Limited, who were the owners of the brand name "ELITE". Similary, they had also taken statements of Mr. H.H. Mithani (partner of the appellant-firm) which was - to be precise - on 20-6-1989 and 23-10-1989. 3.  On the basis of the record of above proceedings including the record of correspondence between the appellants and M/s. Lallubhai Amichand Limited, between the appellants and the Department between M/s. Lallubhai Amichand Limited and the Department etc., the Additional Collector of Central Excise issued show-cause notice dated 18/19-4-1990 to the appellants asking them to show cause why, under Rule 9(2) of the Central Excise Rules read with the proviso to Section 11A (1) of the Central Excises & Salt Act, an amount of Rs. 1,40,941.07 should not be recovered as....
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....ertain facts of the case. The appellants contended that there was no proof for the allegation that they were affixing the brand name "ELITE" on their products from 1-10-1987 and that it was only from 12-6-1989 that they actually affixed the brand name on their products cleared to M/s. Lallubhai Amichand Limited and other agencies as evidenced by the correspondence between the said agencies and the appellants. The appellants further contended that, in the absence of proof on the part of the Department for the allegation that they were affixing the brand name from 1-10-1987 onwards, the demand of Central Excise duty on their clearances of pressure cooker parts for the period from 1-10-1987 to 12-6-1989 could not be sustained. During the adjudication proceedings, certain persons were cross-examined on behalf of the appellants, which was followed by personal hearing. The Additional Collector, who adjudicated the dispute, reached a finding that the appellants contravened various provisions of the Central Excise Rules by engaging themselves in the manufacture and clandestine removal of pressure cooker parts without obtaining Central Excise Licence, without filing classification list, wit....
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....or exemption from duty under the said Notification (as amended) in respect of such clearances. The appellants have not disputed the fact that they had cleared pressure cooker parts affixed with the brand name 'ELITE' belonging to M/s. Lallubhai Amichand Limited during the period 12-6-1989 to 23-10-1989 and that the said M/s. Lallubhai Amichand Limited were not eligible for the exemption under the above Notification during the said period. It was also submitted by them in their reply to the show-cause notice that the excise duty on the clearances of branded goods during the period from June, 1989 to October, 1989 amounting to Rs. 24,901.07 had already been paid by them well before the issuance of the show-cause notice. On a careful examination of the impugned order of the Additional Collector, we have noted that this payment of duty was not taken into account by the lower authority while demanding duty for the period 1-10-1987 to 23-10-1989. The appellants have raised this point as a ground for their challenge against the order of the Additional Collector. The lower authority has neither discussed this objection of the party nor reached any finding thereon. The factum of the above p....
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....placed by the latter and that in the said purchase order, they had instructed the appellants to affix their brand name on the products consigned to them. Subsequently, Shri H.H. Mithani, in his statement recorded on 12-12-1989, stated that they had sold their products to M/s. Lallubhai Amichand Limited and M/s. Modern Domestic Appliances after affixing ELITE brand name during the period 1-10-1987 to 23-10-1989. He also stated that the sale of the product to local agencies was without affixing any brand name. In the above statements made by partners of the appellant-firm before the Central Excise authorities from time to timer we note, the appellants had admitted before the authorities that they had manufactured and cleared pressure cooker parts affixed with the brand name ELITE to various parties from 1-10-1987 to 23-10-1989. 10. We however note that the above admission of the appellants was retracted by Shri M.R. Patel, one of the partners of the appellant-firm in his letter dated 13-12-1989 addressed to the Superintendent of Central Excise (Preventive Headquarters, Rajkot). In the said letter, Shri M.R. Patel stated that the earlier statements of Shri H.H. Mithani to the ....
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.... Brand. Lallubhai Amichand Ltd. has recently informed us that all 'parts of Pressure Cooker' fitted on the Pressure Cookers supplied to them by us, must bear their 'Logo' viz. ELITE Mark. We understand they have already sent you the design of their 'Logo'. We have to request you to kindly ensure that all future supplies to us are marked with the 'Logo' Elite, as Lallubhai Amichand Limited have informed us that they will not be in a position to accept any supplies hereafter without the logo mark. Kindly confirm that all your future supplies to us will be with the ELITE Logo mark. Thanking you, Yours faithfully, FOR MODERN DOMESTIC APPLIANCES Sd /- Partner" xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 11. The signatories of the above two letters were not examined to prove the facts stated therein. However, the lower authority accepted the said facts to be correct, though, while doing so, the learned Additional Collector observed to the effect that there was no indication (in the said letters) that the goods manufactured and supplied by the appellants to M/s. Lallubhai Amichand Limited and M/s. Modern Domestic Appliances prior to ....
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.... adjudicating authority, and he proved the above letter dated 12-6-1989 and the facts stated therein. 14.  In their letter dated 13-12-89 submitted to the jurisdictional Superintendent of Central Excise, the appellants retracted their earlier statements recorded under Section 14 of the Central Excise & Salt Act. They submitted that their earlier statement that they had supplied "ELITE" brand goods to M/s. Lallubhai Amichand Limited and M/s. Modern Domestic Appliances from 1-10-1987 to 23-10-1989 was a mistake of fact only. Their earlier statement that they had sold the branded goods to M/s. Ganesh Enterprises was, similarly, a mistake of fact. They, further, clarified that they had supplied such goods to M/s. Lallubhai Amichand Limited and M/s. Modern Domestic Agencies only after 10-6-1989 and that they had not at all sold such branded goods to M/s. Ganesh Enterprises. 15. We have also noted that the appellants produced before the adjudicating authority an affidavit of a partner of M/s. Ganesh Enterprises, wherein the deponent stated that the goods purchased from the appellants were without any brand name and that they (M/s. Ganesh Enterprises) used to affix brand n....
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....es and M/s. Kothari Agencies (who were cross-examined before the adjudicating authority) nor the affidavit of partner of M/s. Ganesh Enterprises was considered by the learned Additional Collector. We have not found any evidence on record which warrants a conclusion that the appellants' customers admitted that goods purchased from the appellants were always with ELITE brand. The finding of the lower authority to this effect is liable to be reversed. 18. We have further noted that the thrust of the adjudicating authority is on the appellants' pre 13-12-1989 statements, for reaching the finding that they manufactured and cleared ELITE - branded parts of pressure cooker to M/s. Lallubhai Amichand Limited right from 1-10-1987. The retraction of such statements by the appellants in their letter dated 13-12-1989 to the Central Excise Superintendent has not been taken into account at all by the lower authority. The learned Advocate for the appellants has submitted that such retraction was made by the party on the ground that their earlier statements (to the effect that ELITE branded parts of pressure cooker had been cleared to customers prior to 10-6-1989 also) had happened to be m....
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.... no penalty was imposable on the appellant under Section 112 of the Customs Act. In the instant case, we have not been able to find any reliabale independent evidence corroborating the appellants' retracted statements. On the other hand, as we have already noted, their case after the retraction stands corroborated by independent evidence. 20.  Learned Advocate has, further, cited the Hon'ble Allahabad High Court's judgment in the case of Sheo Narain Duli Chand v. Commissioner of Income-tax [ (1969) 71 I.T.R. (S.N.) 30], wherein it was held that there was no presumption that witnesses appearing for an assessee came forward to give false evidence to oblige the assessee. We, however, have not noticed any finding or observation in the Additional Collector's order which calls for application of this ruling of the Hon'ble High Court. 21. We have also noted that one of the grounds on which the benefits of Exemption Notification were proposed to be denied to the party was that they had not followed the procedure under Chapter X of the Central Excise Rules. The appellants contested this proposal by submitting (in their reply to show-cause notice) that the exemption available....