Roopkala Export Corpn. vs Union Of India (Uoi)
2003 Latest Caselaw 877 Bom

JUDGMENT

J.P. Devadhar, J.

1. Rule. Returnable forthwith. Petition taken up for final hearing by consent of parties.

2. In this case, the Revision Application filed by the Petitioners was dismissed by the Joint Secretary of the Government of India vide order dated 19th April, 2002. By the said order, the Joint Secretary, Government of India had upheld the orders passed by the authorities below and confirmed the demand for recovery of rebate of duty wrongly granted to the Petitioners. Challenging the said order, the present petition has been filed.

3. The facts having bearing on the subject-matter of the present petition are as follows :

On the basis of the intelligence gathered that the Petitioners have fraudulently claimed and obtained rebate of the Central Excise duty on the fabrics exported during the period 1992 to 1995, the Excise Authorities searched the premises of the Petitioners and seized incriminating documents found therein. During the course of investigation, statements of several persons, including the Petitioner No. 2, were recorded. The Petitioner No. 2 in his statement inter alia admitted that the linkage between the exported fabrics and the duty paid fabrics purchased for export could not be established and accordingly, deposited back part of the duty rebate wrongly obtained by the Petitioners. On completion of investigation, five show cause notices were issued to the Petitioners and thereafter, the order-in-original dated 7th December, 2000 was passed by the Additional Commissioner of Central Excise, Mumbai confirming the demand of duty rebate which was wrongly granted to the Petitioners. By the said order, the amount deposited by the Petitioners during the course of investigation were directed to be appropriated towards the demand and the Petitioners were called upon to pay the balance amount. By the said order penalty of Rs. 2,00,000/- was levied upon the Petitioner No. 1 and penalty of Rs. 1,00,000/- on the Petitioner No. 2. On appeal, the Commissioner of Central Excise (Appeals) by his order dated 31st March, 2002 confirmed the order of the Additional Commissioner of Central Excise with regard to the duty demand and the penalty levied against the Petitioner No. 1 Company. However, the Commissioner (Appeals) set aside the penalty imposed upon the Petitioner No. 2. On further appeal, the Joint Secretary, Government of India by the impugned order dated 19th April, 2002 confirmed the order passed by the Commissioner (Appeals). Hence, this Writ Petition.

4. Mr. Patil, learned Counsel, appearing on behalf of the Petitioners submitted that on the basis of documents on record, it could be conclusively established that the entire process of cutting and repacking of duty paid fabrics was carried out under the supervision of the Excise Officers and the duty rebate was granted on the basis of the certificate issued by the excise officers and, therefore, the duty rebate granted was in accordance with law. That in the absence of any other evidence on record, it is not open to the Revenue to seek recovery of duty rebate paid to the Petitioners.

5. He submitted that the description of the exported goods mentioned in GPI, AR4 and shipping bills relating to all the 5 show cause notices covered under the petition, match in toto, which conclusively evidences that the goods covered under the duty paying documents were in fact exported. With regard to the difference in the quantity found in the shipping bills as against the purchased documents, it was submitted that the Petitioners are claiming rebate only with regard to approximately 10% of their exports and in respect of 90% of the exports, the Petitioners have not claimed any rebate for want of duty paying documents and/or linkage between the duty paying goods and the exported goods. It was submitted that if the total quantity purchased and exported is considered, it is seen that for a very small quantity the rebate has been claimed. As regards the mismatch of the length of the fabrics purchased and exported, it was submitted that it might be a case of wrong mention of the length of the fabric packing in stray cases, and hence, the same cannot be a ground for rejecting rebate. It was submitted that in the present case, NOC issued by the consignee in whose name the GPI/duty paying documents were standing were produced and the purchases were made from the dealers, who had brought the goods either from such consignee or first, second or third dealer and, therefore, the allegations that there is no linkage of the party issuing the NOC with the party who has sold the fabrics to the Petitioners is not sustainable. It was submitted that it is an undisputed fact that the fabrics were received in mill packed condition and the same were cut and repacked under the physical supervision/control of Excise Officer's and hence the duty rebate correctly given to the Petitioners could not be denied.

6. As regards the statement of Mr. Amit Motla (Petitioner No. 2), it was submitted that his statements were taken under duress and that in their defence reply dated 24-4-1999 (in reply to the show cause notice dated 9-2-1999), it was clearly stated that the statements taken under duress and pressure do not reflect the correct position which was actually prevailing at the relevant time. It was submitted that the authorities below did not rely upon the statement of Mr. Amit Motla recorded on several days in September, 1995 and, therefore, the Petitioners were under the bona fide belief that the retracted statements have not been considered as the basis for the denial of the rebate claim and, therefore, no reference to the retracted statements of the Petitioner No. 2, were made in the petition. Accordingly, it was submitted that the rebate claim cannot be denied to the Petitioners, based on such retracted statements which were not even taken into account by the authorities below.

7. It was further submitted that in any event, the statement of the Petitioner No. 2 being contrary to the facts on record cannot be relied upon because each export consignment could be co-related with all the documents like shipping bills, bills of lading, AR4, GP1, packing, NOC, purchase bills, etc. It was submitted that the statement of Petitioner No. 2 recorded under duress does not survive in the face of the factual position enumerated and demonstrated by the Petitioners from the facts on record.

8. Mr. Patil, relied upon several decisions of the Tribunal to establish that the statements recorded contrary to the factual position, cannot be sustained. He submitted that the show cause notices issued by invoking the extended period of limitation were clearly time-barred because every factual position was within the knowledge of the Department and the rebate claim was allowed based on the very same documents which were sought to be made the basis for issuing the show cause notices. It was submitted that in the absence of any new materials brought on record, the show cause notices were clearly time-barred.

9. It was further submitted that the statement of Mr. Amit Motla, referred to above, was with regard to five AR4's, out of which some of the AR4 are not part of the present petition and the Government of India in their Revision Application in similar circumstances have held that the rebate in respect of such exports are admissible. In this view of the matter, it was submitted that when there is no mens rea whatsoever, penalising the Petitioners is improper and, therefore, the impugned orders be quashed and set aside.

10. Mr. Singh, learned Counsel, appearing on behalf of the Revenue supported the orders passed by the authorities below and submitted that in view of the discrepancies noticed in the documents furnished by the Petitioners and in view of the admission of the Petitioner No. 2 regarding wrongful availment of duty rebate, no interference is called for in a Writ jurisdiction.

11. Having heard the Counsel on both sides, we are of the opinion that in view of the concurrent findings of fact given by all the authorities below to the effect that the exports made by the petitioners could not be co-related with the duty paid documents, no interference is called for in a Writ jurisdiction. Moreover, the findings given by the authorities below is corroborated by the statement of the Petitioner No. 2 recorded under Section 14 of the Central Excises and Salt Act, 1944 ('Act' for short). In his statement recorded on 12th September, 1995, the Petitioner No. 2 had stated that his statement is binding on the Petitioner No. 1, M/s. Roopkala Export Corp. (I). In his statement recorded on 20th September, 1995, Mr. Amit Motla, the Petitioner No. 2 herein, inter alia, stated as follows : -

".. Yesterday i.e. on 19-9-95 I had been shown by you Refund Order No. 11252, dated 25-9-92 for Claim No. 12528, dated 7-9-92 along with the enclosed document. Yesterday I was not in a position to comment on same since the matter was old. Today I am in a position to comment on the same. The goods i.e. fabrics have been received from the traders in PCS....

....To your query as to the purchase of fabrics of 5.25 Lmtrs. and export of the same being shown 5.5 mtrs. In respect of purchase bills of M/s. Geeta Prints I have to state that normally it would not occur. However, since the matter is old I could not confirm the same but as it stands I do not have any explanation to the best of my knowledge and from the documents shown by you I have to state that the goods which were exported were not the goods which were shown in the gate passes and rebate was claimed. Since we have given undertaking to the Department with each claim separately that "We undertake to refund to the Collector of Central Excise on demand whenever made in regard to excess payment or erroneous payment" and since you have shown the above claim to be erroneous and since we agree with the same we make payment of the same. We have already paid an amount of Rs. 2,50,000/-, this amount of Rs. 30,157.73 may be adjusted against the above payment made by us on 12-9-95......."(sic)

It is further stated by Mr. Amit Motla as follows :-

"....To your query, regarding the purchase details from M/s. Dahyabhai M. Patel I have to state that 1 have gone through the purchase register for the period 1-4-92 to 31-3-93 and there is no entry in the purchase register of the above trader nor is there any purchase bill in the purchase bill file of the above trader. However, I feel that the goods may have been bought from a sister concern of the above trader. Since the matter is old I cannot confirm the same but as it stands I do not have an any explanation to the best of my knowledge and from the documents shown by you I have to state that the goods which were exported were not the same which were shown in the gate passes and rebate was claimed. Since you have shown the above claim to be erroneous and since I agree with the same I make the payment of the same."

Mr. Amit Motla further stated as follows :-

"......Similarly I have been shown copy of AR4A No. 628, dated 15-7-92, SB No. 149723, dated 14-7-92, GP1 No. 484 dated 14-5-92 of M/s. Manila Dyeing and Printing Mills consigned to M/s. J.J. Group of Mills GP1 No. 489, dated 14-5-92 and GP1 No. 358, dated 4-5-92 both of M/s. Manila Dyeing and Printing Mills and both consigned to M/s. J.J. Group of Mills NOC's dated 30-5-92 and 21-5-92 of M/s. J.J. Group of Mills 3 copies of declaration of my firm, B/L No. DUB 1037, dated 18-6-92 I have put my dated signature on all the above documents on having seen and perused the same. The fabrics have been received from the traders in pcs. as shown in the purchase invoices of M/s. J.J. Group of Mills. I am putting my dated signature today on the purchase invoices from purchase File No. J to K for period 1-4-92 to 31-3-93 Page Nos. 599, 601, 603. To your query as to the purchase of fabrics of 5.00 Lmtrs. and export of the same being shown 5.5 mtrs. I have to state that normally it would not occur. However, since the matter is old I could not confirm the same but as it stands I do not have any explanation to the best of my knowledge and from the documents shown by you I have to state that the goods which were exported were not the goods which were shown in the gate passes and rebate was claimed. Since you have shown the above claim to be erroneous and I agree with the same this amount of Rs. 4035.39 may be adjusted against the payments of Rs. 2,50,000/- made by us on 12-9-95...."

It is further stated by Mr. Amit Motla as follows :-

"Similarly, I have been shown copy of AR-4A No. 477, dated 8-7-91, a copy of SC No. 26251, dated 8-7-91, GPI No. 253, dated 12-3-91 of M/s. Pashupati Prints Pvt. Ltd. consigned to M/s. Ganpati Textile and M/s. Pashupati Textiles, AWB No. 61815014576, dated 8-7-91, NOC issued by M/s. Ganapati Textile, NOC issued by M/s. Pashupati Textile, 3 copies of letters of declaration given by my firm. I have gone through the purchase bills Files and I cannot link the purchase made against the goods of the CPI. I cannot confirm the same as the matter is very old but as it stands I do not have any explanation I have to state that the goods which were exported were not the same which were shown in the CPI and rebate was claimed. Since you have shown the above claim to be erroneous and since I agree with the same, I make the payment of the same...."

It is also stated by Mr. Amit Motla as follows :-

"The total amount of 98 rebate claims as per Annexure A and the above five claims comes Rs. 14,16,895/- and of which we have already given 3 cheques of Rs. 2,50,000/- each dated 6-9-95, totally amounting to Rs. 7,50,000/-. For the remaining amount of Rs. 6,66,895/- I am giving 3 cheques bearing Nos. 197670, 71, 72 for Rs. 2,25,000/-, Rs. 2,25,000/- and Rs. 2,16,895/- respectively all dated 20-9-95, I will be depositing them on 16-10-95,15-11-95 and 15-12-95 respectively. Out of the three cheques for Rs. 2,50,000/- each all dated 6-9-95 I have deposited one cheque on 12-9-95 and challan received from the bank. I am producing before you the other two cheques, one I will deposit on 25-9-95 and another on 5-10-95. I am also ready to pay the rebate claims if any found by you to be erroneous other than the claims mentioned in the statement if agreed by us. Further I have to state the entire goods which were exported were 100% Polyster and they were duty paid materials. I also do not have the proof of the same. I also want to add here that to peace of mind and to maintain good relation with the department, I am paying this amount. I have nothing more to say. I have written the above statement in my own handwriting. I have given the above statement of my own free will without any force or threat and the statement has been correctly recorded....." (sic)

12. From the aforesaid statements recorded under Section 14 of the Act, it is abundantly clear that from the books maintained by the Petitioners, it could not be established that the export goods were made of duty paid raw materials. In fact, Motla unequivocally admitted that the goods which were exported were not the same which were shown in the GP1 on the basis of which the rebate was claimed.

13. From the aforesaid statements, it is also clear that the Petitioners having failed to establish that the export fabrics were made from duty paid fabrics have voluntarily deposited the duty rebate wrongly received by them. These statements were never retracted. Therefore, in view of the uncontroverted admission of the Petitioner No. 2 in his statement recorded under Section 14 of the Excise Act to the effect that the goods which were exported were not the same which were shown in the GP1 and rebate was claimed, no fault can be found with the orders passed by the authorities below.

14. It was, however, contended that in the defence reply dated 24-4-1999 (in reply to the show cause notice dated 9-2-1999), the Petitioners had submitted that the statements of Petitioner No. 2 were taken in the year 1995 under duress and that the said statements do not reflect the correct position which was prevailing at the relevant time. By no stretch of imagination such a vague statement made in reply to the show cause notice can be said to be a retraction of the statement recorded under Section 14 of the Act. Even assuming that the said statements were retracted, the very fact that the statements recorded in September, 1995 were sought to be retracted in April, 1999 in reply to show cause notices issued in the year 1999 clearly shows that the said retraction is merely an afterthought and is not bona fide.

15. The contention of the Petitioners that the authorities below have not relied upon the statements of the Petitioner No. 2 and, therefore, the claim of the Petitioners cannot be rejected on the basis of the statement of Petitioner No. 2, is also not correct. From Para 7 of the show cause notice dated 29-7-1997 (See Exhibit "A" to the petition), it is seen that the Revenue had relied upon the statement of Mr. Amit Motla (See Page 67 of the petition) recorded under Section 14 of the Act on 20-9-1995. In the adjudication order, it is clearly stated (See Page 186 of the petition) that the Petitioner No. 2 did not appear in the adjudication proceedings and explain the matter possibly because he had nothing much to explain in the face of specific discrepancy and points mentioned in the show cause notice. After dealing with all the contentions, it was held by the adjudicating authority that the allegations levelled in the show cause notice are fully proved and the amount of rebate wrongly paid to the Petitioners are liable to be recovered and the Petitioners are liable to penal action under the provisions of the Act. Neither in the appeal nor in the Revision Application and not even in the Writ Petition, it is averred by the Petitioners that the statements recorded under Section 14 of the Excise Act, which are admissible in evidence (See decision of the Apex Court in the case of B.K.B. Patel v. Assistant Collector of Central Excise reported in 1997 (96) E.L.T. 211 cannot be relied upon. Thus, it is clear that the adjudication order takes into account the statement of Petitioner No. 2 recorded in the year 1995. Under the circumstances, the contentions of the Petitioners that the statement of the Petitioner No. 2 has not been relied upon by the authorities below is not correct.

16. Apart from the above, in the present case the Petitioners have not only admitted that the amount of rebate was erroneously obtained, but also voluntarily deposited substantial amount of duty rebate wrongly obtained by the Petitioners. If the statements were recorded under duress and if the payment of several lakhs of rupees were not made by the Petitioners during the course of investigation, voluntarily, surely, the Petitioners would not have kept quiet for three and half years and only on issuance of the show cause notice in 1999 would not have mildly protested in their reply that the statements recorded in 1995 do not reflect the correct position. Therefore, in view of the uncontroverted statement of the Petitioner No. 2 coupled with voluntary payment made by the Petitioners during the course of investigation, we do not find any merit in the contentions raised on behalf of the petitioners.

17. Apart from the above, the contention of the Petitioners that from the documents on record the linkage between the export goods and the duty paid fabrics can be established is also without any merit. To prove that the export fabrics were made from duty paid fabrics, the Petitioners have relied upon the purchase bill of dealer C (from whom the fabrics were purchased by the Petitioners) and the N.O.C. issued by dealer A who is supposed to have purchased the fabrics from the manufacturer on payment of duty. Now, the question is how to link the duty paid fabrics sold by dealer A to dealer B, from dealer B to dealer C and ultimately the fabrics purchased by the Petitioners from dealer C is the same fabrics on which duty has been paid by the dealer A ? Admittedly, the Petitioners do not maintain any stock register. From the purchase register maintained by the Petitioners, it could not be said that the goods supplied by dealer C to the Petitioners are the same goods on which duty has been paid by dealer A. There is no other document to show that the fabrics supplied by the dealer C to the Petitioners is the same fabrics purchased by dealer A on payment of duty, except the certificate issued by the Excise Officers that the cutting and packing of export fabrics was done under their supervision. As against the certificate of the excise officers, there is statement of the Petitioner No. 2 recorded under Section 14 of the Central Excise Act to the effect that the goods received by the Petitioner from dealer 'C' were not in mill pack condition, but the same were in pieces. It is also admitted by the Petitioner No, 2 that the exported goods were not the same goods on which duty of excise have been paid by dealer 'A'. In implementation of their statements, the Petitioners have deposited the amount of duty rebate wrongly availed by them and did not protest till the show cause notice was issued after three and half years. Moreover, admittedly there were discrepancies in the length of the fabrics purchased and exported. In any event, the fact remains that the goods received by the Petitioners were not in mill packed condition. Under these circumstances, it cannot be said that the books and the documents maintained by the Petitioners unequivocally established that the goods received by the Petitioners were the same goods on which duty has been paid by dealer A and that the said duty paid goods being exported, the Petitioners are entitled to duty rebate. Therefore, in the light of the above investigation and material evidence collected, the Excise Authorities were justified in invoking the extended period of limitation. In this view of the matter, the contention of the Petitioner that from the material on record, the linkage between the export goods and the duty paid goods used in the manufacture of export goods is established and that the show cause notice was barred by limitation, cannot be accepted.

18. Before parting, we would like to record our dissatisfaction regarding the manner in which the present case has been handled by the Excise Authorities. In this case, in September, 1995, the Respondents came to know that the endorsement made on the shipping bills by the Excise Officers certifying that the export fabrics were cut and packed under their supervision were incorrect, if not false. In spite of the above knowledge, no action was taken against those officers. In the order-in-original, the Additional Commissioner of Central Excise, Mumbai-I (Page 185 of the petition) has stated that in Government service, due to pressure of work or urgency of or otherwise, documents are signed by the Officers in good faith and that this could be a serious mistake for which action can be taken against such Officers. In the present case, in fact, no action was taken and the concerned Officers who had issued bogus/incorrect certificates have been allowed to retire peacefully in the year 1996 or thereafter in spite of the knowledge in September, 1995 that these Officers had issued bogus/incorrect certificates. We are told that in view of the retirement, no action can be taken against those Officers. Inaction on the part of the higher authorities in the Central Excise Department to initiate prompt action in such cases is bound to send wrong signal to the officials working at the lower level. In fact, inaction on the part of the higher authorities in the Excise Department to take prompt action in such cases, would embolden the lower officials to indulge in such activities with a view to defraud the Revenue. Inaction on the part of the higher officials in such cases is nothing short of shielding unworthy employees to say the least. Therefore, it is high time that the Excise Authorities take immediate and prompt action in such cases to ensure that such cases do not recur again.

19. For all the aforesaid reasons, the petition is dismissed with costs.