w w w . L a w y e r S e r v i c e s . i n



MARATHWADA ALLOY STEEL COMPANY LTD. VERSUS COLLECTOR OF C. EX.


Company & Directors' Information:- R P K ALLOY STEEL PRIVATE LIMITED [Active] CIN = U27104TN1989PTC016867

Company & Directors' Information:- M. P. ALLOY PRIVATE LIMITED [Strike Off] CIN = U28111UP1995PTC018405

Company & Directors' Information:- J D ALLOY STEEL PVT LTD [Active] CIN = U27106CH1981PTC004509

Company & Directors' Information:- B D K ALLOY PRIVATE LIMITED [Amalgamated] CIN = U27106KA1973PTC002355

Company & Directors' Information:- MARATHWADA STEEL PRIVATE LIMITED [Active] CIN = U74900MH2016PTC272858

    Writ Petition 369 of 1981

    Decided On, 16 August 1990

    At, High Court of Judicature at Bombay

    By, THE HONOURABLE MR. JUSTICE M.F. SALDANHA & THE HONOURABLE MR. JUSTICE M.L. PENDSE

    For the Appearing Parties: M.M.Vashi, M.P.Vashi, R.V.Desai, Advocates.



Judgment Text

M.L. PENDSE J.


( 1 ) THE Petitioners are a public limited company and area manufacturing steel at their factory at Chikalthana in Aurangabad district. The items manufactured by the petitioners are subjected to payment of excise duty in accordance with the provisions of Central Excises and Salt Act, (in short the act). The petitioners are holding central excise licence and are required to maintain necessary accounts in accordance with the rules. On July 8, 1975 the factory premises of the petitioners were inspected by the officers of the Central Excise and RG-1 account was verified. It was noticed that the stock in the factory was less than what was shown in the excise register. The shortage found at the time of inspection was to the extent of 150. 040 M. Tonnes of steel ingots. The verification of the existing stock and the register was carried out in the presence of J. P. Goel, administrative Officer of the petitioner company and said Officer gave in writing admitting that the actual stock was less than what was stated in the register. As disparity observed in the stock register was too glaring, the Central Excise Authorities carried out the investigation and that revealed that the petitioner company had not accounted for in the RG-1 register during the period from January 1, 1974 to June 30, 1975, the production of 776. 308 M. Tonnes of steel ingots. During inspection of the factory's records, it was also observed that dates of removal on a number of the gate passes were erased and written over again. The alteration were made in violation of instructions issued under the rules. After completion of the investigation, the petitioners were served with show-cause notice dated January 12, 1976 to explain as to why action should not be taken for breach of provisions of the central Excise Rules. Notice was also issued to two of the consignees of the petitioners to explain why the goods consigned to them should not be confiscated as the same were removed without payment of duty at the factory gate.


( 2 ) THE Collector of Central Excise, Poona examined the reply filed by the petitioners to the show-cause notice and also permitted the petitioners to lead evidence and cross-examine the officers of Central Excise. After a long-drawn inquiry, the Collector, by order of adjudication dated January 21, 1977, directed confiscation of 9. 500 M. Tonnes and 2. 335 M. Tonnes of steel ingots seized from two consignees in accordance with rule 173-Q of Central Excise Rules. The collector gave option to the two consignees to release the goods on payment of Rs. 6,250/- and Rs. 1,250/ -. The Collector also imposed penalty of Rs. 25,000/- on the petitioners under rule 173-Q of Central Excise Rules. The Collector also demanded duty on 926. 348 M. Tonnes of steel ingots cleared by the petitioners without payment of duty under Rule 9 (2) of the Central excise Rules. The order of adjudication passed by the Collector was challenged in appeal preferred to the government of India. The appeal was partly allowed by Member of Central Board of Excise and customs by order dated September 26, 1980. The Board came to the conclusion that the finding of the Collector in respect of clearance of goods in 81 cases without payment of duty is clearly supported by evidence and explanation of the petitioners is far from acceptable. The Board accepted the contention of the petitioners that the difference in the range of 6% of the quantity reported to the Ministry of Steel by the petitioners and what was entered in the RG-1 register can be explained. The Board, therefore, directed that on the balance quantity for which duty demand has been raised by the Collector, that is 926. 348 M. Tonnes less 482. 301 M. Tonnes, duty should be recovered from the petitioners. The Board reduced the penalty from Rs. 25,000/- to Rs. 5,000. As far as the order of confiscation of the two consignments, the Board noticed that the option for redemption was exercised. The order of the Board is under challenge in this petition under article 226 of the Constitution.


( 3 ) MR. Vashi, learned counsel appearing on behalf of the petitioners, submitted that the finding of the Collector that clearance of steel ingots weighing 926. 348 M. Tonnes was without payment of duty, is not correct. The learned counsel also urged that it is difficult to appreciate how the appellate authority granted relief in respect of payment of duty by deduction of 482. 301 M. Tonnes from 926. 348 M. Tonnes of steel ingots as passed by the Collector. There is no merit whatsoever in both the contentions raised by the learned counsel. As regards the first contention, the Collector is right in his conclusion that duty escaped in respect of clearance of 926. 348 M. Tonnes of steel ingots. The Collector relied upon the fact that on July 8, 1975, when the officers of Central Excise visited the factory, a net shortage of 150. 040 M. Tonnes of steel ingots was found. The Collector also recorded a finding that on the basis of further investigation and on the basis of inspection of RG-1 register, it was established that from January 1, 1974 to June 30, 1975 a production of 776. 308 M. Tonnes of steel ingots was cleared without payment of duty. Mr. Vashi submits that in respect of finding that the net shortage of 150. 040 M. Tonnes of steel ingots was found on July 8, 1975, the conclusion is not supported by any evidence. The submission is not correct. At the time of inspection on July 8, 1975, statement of Goel who was the Administrative officer of the petitioner, was recorded and Goel unmistakably stated that net shortage of 150. 040 M. Tonnes of steel ingots was found. Mr. Vashi submitted that statement of Goel should not be relied upon for two reasons. First, that Goel was not available for cross-examination before the Collector inspite of demand by the petitioners and second, the officers of the Central Excise without actual checking of the entire stock came to the conclusion that the net shortage was to the extent of 150. 040 M. Tonnes. There is no merit in both the submissions. As regards the contention that Goel was not available for the cross-examination, the Collector rightly pointed out that Goel was Administrative Officer of the Petitioners and at no stage, till the arguments were advanced before the Collector, it was alleged that the statement of Goel was irresponsible or incorrect. The statement of Goel was recorded in the presence of Mr. Mandal, who was the Works Manager at the relevant time. It is true that Goel could not be rendered for cross-examination but the reason is not far to see. The petitioners dismissed Goel from the service after July 8, 1975 and it was impossible for Central Excise officers to keep him present before the collector. The contention of Mr. Vashi that the net shortage of 150. 040 M. Tonnes was recorded without actual weighment of the entire stock, is based on the cross-examination of R. G. Gathade deposed that weighment was conducted and the stock of full length and half length steel ingots was arrived at by taking into consideration the average weight of full length and half length ingots at the time of physical verification. From this statement, it is claimed that the entire stock was not checked. It is not possible to accept the submission. The person in-charge of the petitioners' factory accepted that the net shortage of 150. 040 M. Tonnes of steel ingots was found after checking and it is not permissible to disturb the concurrent finding recorded by the two authorities below based on this evidence. In our view, the collector was right in concluding that on July 8, 1975, 150. 040 M. Tonnes of steel ingots were found short and therefore, must have been cleared without payment of duty.


( 4 ) AS regards clearance of 776. 308 M. Tonnes of steel ingots between January 1, 1974 to June 30, 1975, there is ample evidence in the shape of RG-1 register and the statements furnished by the petitioners to the Steel Ministry by filing returns. The Collector very rightly pointed out that the perusal of these statements completely knock out the defence of the petitioners that quantity of 776. 308 M. Tonnes of steel ingots was not removed without payment of duty. In our view, the finding of the collector is right and cannot be challenged in this writ petition. The first submission of the learned counsel must therefore fail.


( 5 ) THE second contention urged by Mr. Vashi is that it is difficult to appreciate how the appellate authority held that the duty payable by the petitioners is for the difference between the quantity of 926. 348 M. Tonnes and 482. 301 M. Tonnes. The learned counsel urged that if the appellate authority came to the conclusion that the explanation given by the petitioners that there is bound to be variation in respect of actual stock and what is entered in the register is valid, then the appellate authority should have held that the petitioners are not liable to pay any duty on the alleged clearance of steel ingots without payment of excise duty. The submission has no merit. The Collector has very rightly pointed out that a comparative chart of production, to be found in paragraph 6 of order of the Collector, would establish that there is difference between the registers and the production shown by the statement of quarterly re

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turns filed by the petitioners before the Steel Ministry. Mr. Vashi was not in a position to challenge the accuracy of the figures in dispute but urged that this chart was prepared by the collector without taking into consideration two registers to which reference was made during the course of hearing before the collector. The Collector rightly discarded the two registers on which the petitioners desired to rely, as the said registers were not shown to the detecting officers during the inspection of the factory. An explanation given by the petitioners that the registers were kept back because the officers did not ask them to produce it, could not be accepted. We agree with the view taken by the Collector that the two registers should not be relied upon when the same were tried to be produced only at the stage of arguments. In our judgment, the orders passed by the two authorities below do not suffer from any infirmity and the petition must fail. ( 6 ) ACCORDINGLY, petition fails and rule is discharged with costs.
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