Full Judgment Text
$~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