TAXAP/1157/2007 1/11 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 1157 of 2007 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MS.JUSTICE H.N.DEVANI ========================================= = 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================= = UMIYA CHEM INTERMEDIATE - Appellant(s) Versus COMMISSIONER OF CENTRAL EXCISE& CUSTOMS - Opponent(s) ========================================= Appearance : MR JD SHAH for Appellant(s) : 1, MR RJ OZA for Opponent(s) : 1, ========================================= = CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 22/07/2008 TAXAP/1157/2007 2/11 JUDGMENT ORAL JUDGMENT (Per : HONOURABLE MS.JUSTICE H.N.DEVANI) 1. The appellant – assessee had initially proposed the following questions : “[i] Whether Hon. Tribunal can reverse / annul the decision of Com (A) under the provisions of section 35[c][1] of the Act, without giving the reasons for such reversal/annulment and without dealing with the grounds on which the Hon. Commissioner (A) allowed the appeal? [ii] Whether letter of broker demanding commission for 'Sauda' (agreement to sell) booked by him can be admitted under Section 36A of the Act and other provisions of law, as evidence to substantiate the allegation of clandestine removal of the goods when no acceptance was given or goods delivered against the said 'Sauda'? [iii] Whether Hon. Tribunal can pass order under Section 35C of the Act, avoiding giving reasons for the questions of fact and law raised in the memorandum of cross-objection reversing/annulling the order of Hon. Commissioner (A)? Can this order be called TAXAP/1157/2007 3/11 JUDGMENT speaking order and allowed to sustain under the provisions of Section 35C of the Act? [iv] Whether Hon. Tribunal can pass order under Section 35C of the Act, after lapse of substantial time of about five to six months from the date of personal hearing under the provisions of law and in accordance with principle of natural justice? [v] Whether Hon. Tribunal can entertain appeal under Section 35B of the Act, when Order in Appeal is implemented by sanction of refund application dated 15-1-03 by refund order dated 11-4-2003, when the order in appeal achieved the finality before admission and passing an impugned order? [vi] Whether Hon. Tribunal can reject the rectification application made under Section 35C of the Act, for correcting the mistakes stated hereinabove by stating that it is touching the merits of the case when earlier by its own impugned order the same are not considered?” 2. Subsequently, the said questions have been re- framed and the re-framed questions read as under : “[i] Whether Hon. Tribunal can pass order TAXAP/1157/2007 4/11 JUDGMENT on the basis of assumptions and presumptions without any conclusive evidence available to prove the clandestine removal of the goods disregarding the observations of the Commissioner (Appeals), Surat available on record ? [ii] Whether Hon. Tribunal can treat 'Sauda' (Agreement to sell) as sale of goods when agreement to sell was not accepted and there was no delivery of the goods? [iii] Whether letter of broker demanding commission for Sauda (agreement to sell) booked by him can be accepted as evidence to substantiate the allegations of clandestine removal of the goods when no acceptance was given or goods against the said agreement to sell was delivered? [iv] Whether Hon. Tribunal can avoid comments on the important legal points taken in the order in appeal by Hon. Commissioner (Appeals) and reversing his decision without any reasons? Can this order be called speaking order and allowed to sustain under the provisions of law? [v] Whether Hon. Tribunal can pass order TAXAP/1157/2007 5/11 JUDGMENT after lapse of substantial time of about five to six months under the provisions of law and in accordance with principle of natural justice? [vi] Whether Hon. Tribunal can entertain appeal against the order, which is already implemented and accepted by the department achieving finality before passing the order? [vii] Whether Hon. Tribunal can pass order without appreciating total facts of the case by ignoring some statements in favour of the appellant? [viii] Whether Hon. Tribunal can reject the rectification application made for correcting the mistakes stated hereinabove by stating that it is touching the merits of the case when earlier by its own statement the same are not considered?” 3. The undisputed facts on record are that search was carried out at the factory premises of the appellant on 31.1.98. During the course of search, the officers found that there was a shortage of 400 kgs of 2:4 Di Nitro Chloro Benzene (DNCB) and 1945 kgs of Mono Chloro Benzene) MCB. The RG-23A- Part I Register indicated a stock of 9245 kgs of MCB whereas a stock of only 8200 kgs of MCB was available. One Shri TAXAP/1157/2007 6/11 JUDGMENT Ratilal Patel, partner of the unit, had in the presence of panchas stated that they had cleared 400 kgs of 2:4 DNCB and 1045 kgs of MCB illicitly without payment of Central Excise duty on cash basis in the open market. The officers also recovered two papers of a letter pad of M/s Turakhia Brothers, Vadagai, Bombay addressed to the appellant unit showing the details of goods and the names of the parties. The partner also stated that the two papers showed the details of sale of 2:4 DNCB to different parties by the unit through the broker on cash basis. 4. In the follow up action, the office premises of M/s Turakhia Brothers were also searched and the statement of the proprietor was recorded. Statements of persons connected with the units to which the excisable goods were supplied, were also recorded. Subsequently in connection with the irregularities disclosed during the search, show cause notice came to be issued. The adjudicating authority held that the charges levelled in the show cause notice against the appellant stood proved. 5. The appellant assessee carried the matter in appeal before the Commissioner (Appeals), who vide order dated 4.6.2002 allowed the appeal and set aside the order of the adjudicating authority. The Revenue went in appeal before the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, at TAXAP/1157/2007 7/11 JUDGMENT Ahmedabad, (the Tribunal) who vide the impugned order dated 18.3.2005 allowed the appeal. Being aggrieved, the appellant preferred an appeal before this Court being Tax Appeal No.589 of 2005. The said appeal came to be withdrawn by the appellant with a view to move application for rectification of mistake apparent on the record before the Tribunal. By the impugned order dated 5.6.2007, the rectification application came to be rejected by the Tribunal. 6. The learned advocate for the appellant submitted that the entire case of the Revenue was based on the letter of the broker consisting of two pages, which cannot be said to be incriminating documents for the purpose of holding that there was clandestine removal of excisable goods. According to the appellant, the allegation regarding clandestine removal of goods has to be established by direct evidence, whereas in the present case the only evidence available is the broker’s letter demanding brokerage. It is contended that the Tribunal has overlooked the evidence on record and has misinterpreted the contents of the broker’s letter. It is emphasized that the letter contained details of ‘saudas’ (agreement to sell) made with different parties for their goods. These details are saudas and not sale, as has been presumed by the Tribunal. It is, accordingly, urged that the Revenue has not adduced sufficient and concrete evidence to make out a case TAXAP/1157/2007 8/11 JUDGMENT of clandestine removal, hence, the appeal deserves to be admitted. 7. As can be seen from the facts noted hereinabove, the appellant has called in question the order dated 18.3.2005 passed by the Tribunal made in the appeal filed against the order of the Commissioner (Appeals) as well as the order dated 5.6.2007 passed by the Tribunal on the application for rectification of mistake. Insofar as the order dated 18.3.2005 is concerned, this is the second round of litigation, as earlier, the appellant had withdrawn the appeal preferred against the said order. Hence, insofar as the challenge to the said order is concerned, the same is required to be rejected on this ground alone. Insofar as the second order dated 5.6.2007 rejecting the ROM Application is concerned, the Tribunal has recorded that there is no error apparent. Hence, the said order is based on facts and challenge to the same also cannot be upheld. 8. Even if the case is examined on merits, the Tribunal in its order dated 18.3.2005 has after recording the facts of the case and the contentions of the appellant assessee, observed as follows: “[10]. The entire case is based on the incriminating documents found in the premises of the appellants. As per Section 36A of the TAXAP/1157/2007 9/11 JUDGMENT Central Excise Act, the truth of such documents can be presumed unless the contrary is proved. This Section applies to Department proceedings as well. [11] One of the partner in his statement given before the Central Excise Officers admits that the goods have been removed clandestinely. This statement has not been retracted. The interpretation sought to be given to the word 'Sauda' is not acceptable one. It is only an afterthought version. He is not specific in saying that no goods have been delivered. Further, if it was only a Sauda, why was the broker asking for his commission? All commissions are paid only after the transaction is over. The broker sends the bills for his commission only after the deal is fructified. The broker clearly states that he sent the bills for his commission. [12] The fact that there are discrepancies in the ledger of the broker does not lead to inference that the goods have not been removed from the appellant's premises. The appellant wants to prove his innocence on the basis of some factual errors in the ledger of the broker. It is clearly unacceptable. TAXAP/1157/2007 10/11 JUDGMENT [13] The Revenue is right in holding that in a case of clandestine removal, it is not necessary for the Department to prove its case to the hilt. Incriminating documents, statements recorded and other evidence of shortage of raw materials amply establish that there is clandestine removal in this case.” 9. As can be seen from the findings recorded by the Tribunal, the Tribunal was of the opinion that the incriminating documents found in the premises of the appellant, the statements recorded and the evidence of shortage of material clearly establish that there is clandestine removal of excisable goods. The Tribunal has not accepted the interpretation put forth by the appellant assessee as regards the word ‘Sauda’. The Tribunal has, accordingly, after appreciating the evidence on record held in favour of the Revenue. 10.Insofar as the impugned order dated 5.6.2007 is concerned, the Tribunal has held that the grounds raised in the application for rectification of mistake apparent of record, are all touching the merits of the case and are not errors apparent on record. The Tribunal was of the view that if the grounds canvassed by the appellant are considered, it would amount to opening the case in its entirety and has accordingly rejected the application. TAXAP/1157/2007 11/11 JUDGMENT 11.Upon going through the impugned orders it is apparent that the Tribunal has after appreciating the evidence on record arrived at certain findings of fact. The reasons stated in the impugned orders are in consonance with the evidence on record. Considering the contents of the letter of the Broker, in conjunction with the other evidence on record, the Tribunal was justified in holding that there is clandestine removal of goods. Even if it were possible to take another view, that by itself would be no ground for intervention by this Court. 12.In the aforesaid circumstances in the light of the findings recorded by the Tribunal after appreciation of the evidence of record, no question of law as proposed or otherwise, much less a substantial question of law arises out of the impugned orders of the Tribunal. There being no infirmity in the orders of the Tribunal, the appeal is dismissed. [D.A.MEHTA, J.] [HARSHA DEVANI, J.] parmar*