Dl Nagpal, Partner, M/S Paragon ... vs Commissioner Of Central Excise, ...
2014 Latest Caselaw 1270 Del

$~42-50&56

*     IN THE HIGH COURT OF DELHI AT NEW DELH

%                                 DECIDED ON: 10.03.2014
+           CEAC 11/2014, CM APPL.4418, 4419 & 4420/2014

      DL NAGPAL, PARTNER, M/S PARAGON CABLE
      COMPANY                            ..... Petitioner

                      versus
      COMMISSIONER OF CENTRAL EXCISE, NEW DELHI
                                        ..... Respondent

CEAC 12/2014, CM APPL.4426, 4427 & 4428/2014

PARAGON CABLE CORPORATION ..... Petitioner

versus COMMISSIONER OF CENTRAL EXCISE, NEW DELHI ..... Respondent

CEAC 13/2014, CM APPL.4429, 4430 & 4431/2014 PARAGON CABLE COMPANY ..... Petitioner

versus

COMMISSIONER OF CENTRAL EXCISE, DELHI ..... Respondent CEAC 14/2014, CM APPL.4432, 4434 & 4435/2014 PARAGON CABLE COMPANY ..... Petitioner versus COMMISSIONER OF CENTRAL EXCISE NEW DELHI ..... Respondent

CEAC 11-19/2014 Page 1 CEAC 15/2014, CM APPL.4439, 4440 & 4441/2014

VIPUL NAGPAL, PARTNER, PARAGON CABLE CORPORATION ..... Petitioner

versus

COMMISSIONER OF CENTRAL EXCISE, NEW DELHI ..... Respondent

CEAC 16/2014, CM APPL.4442, 4443 & 4444/2014

SUDHIR NAGPAL, DIRECTOR, M/S PARAGON POWER CABLE LTD ..... Petitioner versus COMMISSIONER OF CENTRAL EXCISE NEW DELHI, ..... Respondent

CEAC 17/2014, CM APPL.4446, 4447 & 4448/2014

PARAGON POWER CABLE LIMITED ..... Petitioner versus COMMISSIONER OF CENTRAL EXCISE ..... Respondent

CEAC 18/2014, CM APPL.4472, 4473 & 4474/2014

PARAGON ENTERPRISES (INDIA) ..... Petitioner versus COMMISSIONER OF CENTRAL EXCISE, NEW DELHI ..... Respondent CEAC 19/2014, CM APPL.4475, 4476 & 4477/2014 DL NAGPAL, PARTNER, ROXY ELECTRICALS ..... Petitioner versus COMMISSIONER OF CENTRAL EXCISE, NEW DELHI ..... Respondent

CEAC 11-19/2014 Page 2 CEAC 21/2014, CM APPL.4520, 4521 & 4522/2014

SOMNATH NAGPAL ..... Petitioner versus COMMISSIONER OF CENTRAL EXCISE ..... Respondent

Appearance: Mr. M.P. Devnath with Mr. Aditya Bhattacharya, Advocates for petitioners in all cases.

Mr. Satish Kumar, Sr. Standing Counsel for the respondents in all cases.

CORAM:

HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.V. EASWAR MR. JUSTICE S.RAVINDRA BHAT (OPEN COURT)

1. These appeals impugn a common order of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) made on 8.8.213 in appeals filed on behalf of the manufacturers (hereafter collectively be known as the appellants - Paragon Group) along with their partners and Directors. The substantial question of law sought to be urged is as to the method adopted by the Revenue - respondent in valuing the seized goods; especially as to the weight of the copper cables recovered from the wooden drums.

2. Briefly, the facts are that the excise authorities on 21.02.2002 carried on search and seizure operations in the premises of the appellants. This was on the basis that manufacturers of wires and cables falling under chapter H.85.44

CEAC 11-19/2014 Page 3 of the schedule to the Central Excise Tariff Act, 1985 were resorting to evasion of duty on different units owned by them or their job workers by claiming Small Scale Industries (SSI) exemption in respect of such units even though they were ineligible. It was alleged that after the search and seizure operations the Paragon Group has suppressed more than 50% of the actual quantity and value of clearances and made false declarations describing the size of wires and cables in the invoices and further understated the weight of the goods.

3. A show cause notice was issued on 13.08.2002 by the Commissioner of Central Excise. After the reply was furnished, an oral hearing was granted and after considering the material on record, the order in original was made on 29.10.2004 by the Commissioner confirming the demand and recovering duties, penalty upon the ten appellants including their Directors and partners. Individual penalty orders were also levied in respect of such partners and Directors. Aggrieved, the appellants approached the CESTAT which by the impugned order dismissed the same.

4. It is contended on behalf of the appellants that both the order in original as well as CESTAT's order suffer from an important omission with respect to the actual quantity. Learned counsel contended that the method of arriving at the weight (core x sq. mtrs.) was fallacious and submitted that this aspect was highlighted as early as the time when the hearing before the

CEAC 11-19/2014 Page 4 Commissioner took place during the show cause notice proceedings. Counsel urged that this aspect was not addressed much less appreciated in its correct perspective. This has led to over estimation of the seized goods.

5. Learned counsel highlighted that the simpler method of subtracting the weight of the goods instead of adopting a different method in arriving the weight of each length of cable could have been adopted to reach a more just solution. It was submitted that this aspect was highlighted before the Tribunal in the hearing. Counsel relied upon the following submissions made in a written note said to have been handed over after making oral submissions to the Tribunal: -

            "8.2.3       Submissions:

            (i) Allegations    are   based    on   assumptions     and
            presumptions.

(ii) The demands has been worked out on the basis of a formula (Wt. Km.). There is no other evidence.

(iii) The difference in weight is because of variation in weight of wooden drums as stated by S/Shri D.L. Nagpal, Sunil Nagpal, Sudhir Nagpal and Vikas Nagpal in their statements dt.25.7.2002.

(iv) No weighment of seized goods got done as to certain exact tare and net weight. Notion weight has been adopted.

(v) Weight is mentioned by transporters in LRs/GRs and is not declared by manufacturers who never bothered

CEAC 11-19/2014 Page 5 about the weight in LR/GR as freight was to be paid by the consignees.

(vi) There is no confession in statements of Partners/Director regarding clandestine removal of excess quantity in the past except the statement dt. 29.4.2002 of Sudhir Nagpal of Paragon Power Cables Ltd., which he changed in his subsequent statement dt. 25.7.2002. Moreover, as stead by partners, directors and buyers all payments have been received by cheque/ bank draft and there is no evidence of cash payment for alleged excess quantity.

(vii) The buyer at Chennai has denied having purchased alleged excess quantity (statement dt. 3.5.2002) in past.

(viii) Value is to be taken as cum duty for calculating demand

(ix) Interest under Section IIAB is not leviable as Section is not attracted in case of demand for period prior to 11.5.2001."

6. The Revenue resists the submissions and contends that full opportunity was given and that the finding as to the question of true weight or the method adopted is a factual one which do not warrant interference by this Court, which exercises jurisdiction exclusively when there is a substantial question of law. It was also submitted that the manufacturers in this case did not appear to have in fact urged this aspect before the Tribunal during the hearing and that the note submitted on this score does not even bear the date.

CEAC 11-19/2014 Page 6

7. This Court has considered the submissions and material on record.

8. In this regard the Court notes that during the course of the order in original, the Commissioner observed as follows: -

"14. Further subsequent to the final hearing which held on 22.09.2004 M/s Paragon Power Cable Ltd, vide his letter dated 27.09.2004 has raised issue of jurisdiction for deciding the case and have also raised the similar points as detailed above and have sought the cross examination of tempo owner and transporter.

I have gone through the submissions made by the noticees, Counsel for the noticees, Mahazars dated 29.05.2002, 31.05.2002, 09.04.2002 and 03.07.2002 and also the statements of directors/ partners of company/firms of the noticees and other evidences available on records. On perusal of various Mahazars of seizure of goods prepared at Chennai by the Officers of DGCEI, Chennai, it is clear that the firms namely M/s Paragon Cable Company, M/s Paragon Enterprises (India). M/s Paracon Cable Company, M/s Paragon Power Cable Ltd. had been sending the goods to their buyers at Chennai by misdeclaring the description, size, quantity and value of the goods without discharging proper Central Excise duty. Shri Somnath Nagpal, partner of M/s Paragon Enterprises (India), and also of M/s Paragon Cable Company in his statement dated 24.07.2002 and 26.07.2002· had unambiguously -

admitted that there was difference in armoured and unarmoured cable and the armoured cable was costlier and he admitted the difference in description, quantity, variation in size etc. of wires and cables sent under the

CEAC 11-19/2014 Page 7 invoices of his firm to M/s Metal's and Metal (Elect) Pvt. Ltd. and M/s Metal's and Metal, Chennai and he agreed with the proceedings under Mahazar dated 09.04.2002, 31.05.2002 and 29.05.2002 and 03.07.2002 and agreed with all the discrepancies noticed and recorded in these Mahazars and accepted his mistakes for sending wires and cables of copper in the name of aluminium, armoured cable in the name of unarmoured cable and of different size under the invoices of his firms.

15. Shri Vikas Nagpal, Partner of M/s Paracon Cable Company in his statement dated 25072002 also agreed with the proceeding of the Mahazars dated 09.04.2002,31.05.2002 and 29.05.2002 and 03.07.2002 and agreed with all the discrepancies noticed and recorded in these Mahazars and accepted his mistakes for sending wires and cables of copper in the name of aluminium, armoured cable in the name of unarmoured cable and of different size under the invoices of his firms.

16. Shri Sudhir Nagpal, Director of M/s Paragon Power Cable Ltd. in his statement dated 25.07.2002 also agreed with the proceeding of the Mahazars dated 09.04.2002, 31.5.2002 and 29.05.2002 and 03.07.2002 and agreed with all the discrepancies noticed and recorded in these Mahazars and accepted his mistakes for sending wires and cables of copper in the name of aluminium, armoured cable in the name of unarmoured cable and of different size under the invoices of his firms. In his statement dated 29.04.2002 he had specifically admitted that they were sending the goods i.e. wires and cables in excess of standard weight to the extent of the difference as taken out between the LR weight and the standard weight. Shri Sunil Nagpal, Partner of M/s

CEAC 11-19/2014 Page 8 Paragon Cable Corporation in his statement dated 25.07.2002 also admitted when shown the worksheet containing the details of invoices issued by various companies of Paragon Group of Companies in favour of M/s Metal's and Metal and M/s Metal's and Metal (Elec) Pvt. Ltd. that there was a difference in the weight of the goods given in the invoices and its corresponding LRs and also agreed with the manner in which the difference and weight has been calculated. The explanation given by Shri Sunil Nagpal that the difference in the worksheet pertaining to his firm could be due to the weight of the wooden drum is not tenable as the weight of the wooden drum had been deducted while calculating the difference of the weight.

Specifically as to the question of weight, the Commissioner recorded the following findings: -

"vi) The Counsel had pointed out that the department had seized goods at godown of a buyer a Chennai but they had not weighed any of the drums. The scrutiny of the various of Mahazars prepared at Chennai clearly indicate that the goods seized were actually accompanied by invoices of different description, the invoices were prepared for unarmoured cable in place of armoured cable, aluminium cable in place of copper cables and also the quantity was found to be excess, the facts had also been admitted very categorically by the partners/directors of the respective Paragon Group of Companies . When there was a clear difference in the goods physically found and seized and the invoice accompanying these goods, these were sufficient evidence to prove the evasion of the Central Excise duty.

CEAC 11-19/2014 Page 9

vii) The Counsel for the noticees has pointed out that the difference of weight had been found out in only in fewer number of invoices and in many invoices the difference of weight is very meagre. This argument was not tenable as there was admittedly variations in the goods found on physical verification with the seized and the accompanying invoices. The department had raised demand in respect of only those cases where the difference in weight mentioned on LRs had been found more than the standard weight and the number of cases where the meagre difference in weight had been found may develop into clandestine removal of a bigger volume.

viii) The department had raised demand in respect of those cases where the difference in weight mentioned on LRs had been found more than the convertible standard weight and the revenue loss was detected."

9. In view of the above, ordinarily the matter ought to have ended there; we, however, notice that the learned counsel stressed that the aspect was highlighted during the course of hearing. Now, the grounds of appeal before the Tribunal are not very specific on this aspect even though a general grievance is made about the question of valuation. However, this specific point appears to have been made in the written submissions said to have been handed over to the Tribunal. The Tribunal did not make its order contemporaneously or within a month of the date of hearing; in this case it rendered its order and published it after about five months. In these circumstances, without any explanation as to whether the written submissions were handed over, particularly since they do not bear any date, it would be hazardous for this Court to conclude that the argument on this

CEAC 11-19/2014 Page 10 aspect was made before the Tribunal which failed to apply its mind. We have deemed it appropriate to discuss this aspect since the appellant's counsel repeatedly submitted that this had a direct bearing on the question of valuation and that the Tribunal ought to have taken care to address the issue. The affidavit in support of the appeal no doubt states that the copies placed on the record are true copies, yet significantly there is no date attributed to the written submissions in any of the pleadings. In this background of the matter, this Court is of the opinion that no substantial question of law arises for consideration.

10. The appeals are accordingly dismissed, along with all the pending applications.

S. RAVINDRA BHAT (JUDGE)

R.V. EASWAR (JUDGE) MARCH 10, 2014 /vks/

CEAC 11-19/2014 Page 11