M/S. Hanumant Cement Pvt Ltd. vs Union Of India
2000 Latest Caselaw 873 Del

ORDER

Arijit Pasayat, C.J.

1. This is an application under Section 35-H of Central Excise Act, 1944. Reference is sought for in respect of an order dated 1.12.1999 (final order No. A/1099-1102/99-NBCDB) passed by the Customs, Excise and Gold (Control) Appellate Tribunal (in short, Tribunal) in Appeal No. E/A572-0575/99NB. Before the CEGAT, order of the Commissioner Central Excise Jaipur (in short, Commissioner) confirming a duty demand of Rs. 49,53,783/- and other demands of penalties were under challenge. In all four appeals had been filed. Allegations against the petitioner were that it had suppressed the production and clearance of 90,782.15 MTs of ordinary Portland cement during the period from 1-8-1993 to 19-8-1996 and evaded duty of the above amount. Penalty of amount equal to duty was levied under Section 11-AC of the Act. Penalty of Rs. 10 lakhs was also levied for contravention of the provisions of the Act and rules made thereunder. In addition, a penalty of Rs. 5 lakh each was levied on other three appellants-Directors of the petitioner company. M/s Hanumant Cement Pvt Ltd. According to the Commis- sioner, a clear case of clandestine removal was made out from the record seized from the factory premises, containing details of working in shifts, power break down, load shedding and number of bags of cement manufactured in each shift.

2. Stand of the petitioner before Tribunal was that evidence on record was not sufficient to sustain the duty and penalty against the company and penalty under Section 11AC is not sustainable since the period of alleged offence is prior to the date of introduction of the said provision under the Act in September, 1996. It was further stated that penalty under Sec- tion 173Q of the Central Excise Rules, 1944 (in short, the Rules) cannot be imposed along with penalty imposed under Section 11AC, and penalty on the directors are required to be set aside since the ingredients under Rule 209A under which penalty has been imposed have not been made out against the directors. It was contended that seized documents did not relate to petitioner. Revenue supported its action with reference to materials on record. It is to be noted that plea of non-counting of stock and erroneous adoption of production capacity was taken by petitioner.

3. Tribunal noticed that the seized records on the basis of which the case of clandestine removal has been made out was seized from the factory premises and one Jai Parkash admitted the entries on the record. The seized documents contain details of working of each shift, power break down, number of bags of cement manufactured in each shift, etc. They also con- tained signatures of the supervisors who were working in the day shift as well as night shift. One sample page from the seized record was also re- ferred to and reproduced in order. Tribunal did not accept the plea that the records did not pertain to the appellant before it. The further stand that the factory was closed for some time in July, 1996 due to invalidation of ICI specification and due to floods etc were also considered to be inconsequential on the face of details which the seized record revealed. It recorded a positive finding that the seized records pertained to production and clearance of cement by the petitioner. So far as the capacity of the mill is concerned, on 3.10.1996, the aforesaid Jai Parkash stated the capacity to be 100 MT per day and only after a gap of two years on 3.9.1998 when a reply to the show cause was given, the production was stated to be 50 MT per day. This was considered by the Tribunal to be an afterthought. The stand of the petitioner before Tribunal was that as a fact there was only one kiln upto June, 1996. Tribunal felt that if it was so, the asses- see should have clarified the position at the earliest possible. Copy of the statement recorded, so far as Jai Parkash is concerned was not only given to him but also to Mahinder Chaudhary, Director of the Company and therefore the Company was obviously in the know of the things mentioned in the statement made by said Jai Parkash about the production capacity of the mill. Plea, therefore, to the effect that production capacity was 50 MT was rejected. Further stand relating to non-verification of physical stock was not accepted because stock verification was carried out in the presence of the accountant of the petitioner who ran away before completion of report and verification continued in the presence of a gate keeper who was in a position to count the filled bags of cement. The destruction of internal gate passes on almost daily basis was held to be a further pointer to clandestine manufacture and removal of cement by the petitioner. The demand levied was accordingly upheld. However, penalty levied under Section 11AC was cancelled, whereas the levy under Rule 173Q was upheld, but quantum was reduced to Rs. 5 lakhs. Penalty imposed upon each of the Directors under section 209A was also cancelled.

4. In support of the reference application, it has been stated that Tribunal's order is perverse as it fails to take into consideration various aspects and materials on record.

5. Vital aspects, which according to the learned counsel were not noticed are as follows:

     >    "Search  was carried in total disregard of the laid down  in       that  behalf  making it mandatory to follow procedure  laid  down       under Section 165 Cr. P.C. No witness was called and no Panchnama       drawn. 
 

     >    Accountant was threatened with arrest and other consequences       and  therefore left factory to call senior officer of the  appli-      cant. 
 

     >    Semi  literate Chowkidar was made to sign  the  verification       memo. Verification of stock in rows of about 12-14 feet deep  and       about 20 ft high was impossible with lone Chowkidar in the facto-      ry. 
 

     >    Copies of records were not supplied for making statements as       per law laid down by Hon'ble Supreme Court. 
 

     >    No investigation done at all as to where from the  applicant       get  the raw materials specially when the same was  a  controlled       item, to manufacture alleged extra-suppressed quantity of cement. 
 

     >    Electricity  consumption figures were brushed aside on  presumptions and assumptions. 
 

     >    Evidence  that  second kiln was commissioned  in  September,       1996 and applicants did not have the capacity to manufacture  the       alleged quantity of cement brushed aside in view of statement  of       Jai Prakash. 
 

     >    Previous 3 years clearance figures showing production capac-      ity totally ignored. 
 

     >    Evidence  of closure of factory from 18-6-1996 to  11-9-1996       brushed aside as false. 
 

     >    Audits conducted by department of records for the years 1-4-      1995 to 31-12-1997 showing no discrepancy ignored."    

6. On a perusal of the Tribunal's order, we find that each of the conten- tions raised by the assessee has been negatived on a reference to the materials on record. Plea that the seized documents did not belong to the assessee is clearly untenable and the Tribunal was justified in its conclu- sion that the seized documents belonged to the assessee. The fact that the signatures of various supervisors and details regarding working of shifts, power break down, bags manufactured in each shift evidently show that books belonged to the petitioner company and to none else. Similarly, other aspects highlighted by petitioner as referred to above, all relate to factual disputes on which Tribunal has recorded its findings after refer- ring to materials on record. Such factual findings and conclusions do not give rise to any question of law, where the determination of an issue depends upon the appreciation of evidence or materials resulting in ascertainment of basic facts without application of any principle of law, the issue raises a mere question of fact. In such cases the Tribunal is the final fact finding authority and if upon examination of all evidence and material it reaches certain findings, decision relates to existence or otherwise of certain facts at issue (See [Sree Meenakshi Mills Ltd. Vs. Commissioner of Income-tax (1957) 31 ITR 28].

7. Any inference from certain facts is also a question of fact, as held by the Apex Court in the said case. The acceptance or rejection of any piece of evidence squarely falls within the ambit of appreciation of evi- dence. A question of fact becomes a question of law only if the finding is either without any evidence or the finding is perverse or there is no direct nexus between conclusion of fact and the primary fact upon which that conclusion is based. If a finding of fact is arrived at by the Tribu- nal by acting on materials partly relevant and partly irrelevant, it is impossible to say to what extent mind of the Tribunal was affected by the irrelevant material used by it in arriving at the finding. Such a finding is vitiated because of the use of the inadmissible material and thereby an issue of law arises. (See. [ Dhiraj lal Girdhari Lal Vs. CIT (1954) 26 ITR 736, CIT Vs. Daulat Ram Rawatmull]. But, as the facts of the present case and the conclusions of the Tribunal vis-a-vis those facts would go to show all relevant materials have been duly considered, and no irrelevant materi- al has been considered.

8. That being the position, we find no question of law arises from the order of the Tribunal. Petition is dismissed. DASTI.