Commnr. Of Central Excise, Mumbai vs M/S. Kalvert Foods India Pvt. Ltd. & Ors

2. Before entering into rival contentions of the parties, it would be necessary although in a nutshell to look into the facts of the case leading to filing of the present appeals.

Ltd. is a company (in short hereinafter referred to as 'the Company') engaged in the manufacture of P & P Food Products, such as, assorted jams, pickles, squashes, cooking sauces, chutneys, syrups, synthetic vinegars etc. The company is also trading in sugar, salt and pepper by packing into small packs. The respondent No. 2, Shri Yunus A. Kalvert is the Managing Director of the Company.

4. On 22.11.2000, on receiving information that respondents were indulging in clandestine removals of its finished P & P food products without payment of Central Excise Duty, the revenue authorities searched the factory premises of the respondent no. 1. Searches were also Page 2 of 22 carried out at the premises of its distributors/wholesale dealers/traders of respondent no. 1 situated in and around Mumbai and other connected premises.

6. Specific allegation against the respondent is that the goods found lying excess in the stock than what were entered into RGI register, valued at Rs. 7,33,668/- and the same was seized.

7. Thereafter, search was also carried out at the premises of the dealers/traders, to whom the company allegedly supplied the finished goods. The goods found lying in those premises to the value of Rs. 6,22,946/- were also seized on the ground that they were not duty paid.

8. Similarly, the search was carried out by the officers on 28-11-2000, at the premises of M/s. Relish Trading Company (in short 'RTC')/the selling agent of the respondent-company, M/s. Sai Krupa, a partnership firm of the Managing Director of the respondent No. 1; and at the premises of sole proprietor of RTC and records pertaining to the sale and purchase of the goods lying in the offices of these companies, were seized. It revealed to the searching officers that, in fact, the respondent-

9. After completion of the entire process a show cause notice was issued to the Company and its Director. Such notices were also issued to the proprietor of M/s. RTC, its partner and M/s. Sai Krupa Corporation. Through notices issued, duty demand was raised from the company and penalty was also proposed to be imposed on the company.

Consequently, the Commissioner confirmed the duty demand and ordered confiscation of the seized goods and also imposed penalty equivalent to the amount of duty on the company and also directed to pay interest on the excise duty etc. Page 5 of 22

11. Being aggrieved by the aforesaid order, respondents filed appeals before the CEGAT. The said appeals were heard and Tribunal passed the judgment and order on 02.08.2002, which is impugned herein. The Tribunal by its order set aside the findings of the Commissioner of Central Excise, Mumbai holding that the respondents were not guilty of clandestine removal of excisable goods and also that the goods of respondent no. 1 were not excisable inasmuch as they were allegedly not packed in containers under a brand name and therefore not required to pay any excise duty.

17. During the search operation carried out by the appellants several incriminating articles were found with brand name "Kalvert Anchor" or "Kalvert" in assorted forms which were manufactured by M/s. Kalvert Foods (I) P. Ltd.

During the course of investigation statement of Shri Yunus A. Kalvert, Managing Director of respondent company was recorded under Section 14 of the Central Excise Act, 1944, who inter alia deposed that the respondent company was engaged in the manufacture of P & P food products like jams; pickles; syrups; vinegars etc. bearing their brand name "KALVERT ANCHOR" and the other Directors of the company viz. Shri Akbar Ali Kalvert, his father and Shri Irshad Y. Kalvert.

18. During the course of arguments learned counsel appearing for the respondent submitted before us that although the aforesaid statements of Managing Director of the Company and other persons were recorded during the course of judicial proceedings but the same were retracted statements, and therefore, they cannot be relied upon.

23. There is no reference about the statement of Miss Vinita M. Khanolkar - sole proprietor of M/s. RTC, in the judgment of order passed by the Tribunal, when she was examined under Section 14 of the Central Excise Act, she had clearly stated that her company bought large Page 13 of 22 quantities of excisable goods from the respondent company and in turn sold them to its distributors. She also confirmed the documents seized from her residence which included correspondence with their customers regarding promotion of the "Kalvert brand" products.

However, the statements were recorded by the Central Excise Officers and they were not police officers. Therefore, such statements made by the Managing Director of the Company and other persons containing all the details about the functioning of the company which could be made only with personal knowledge of the respondents and therefore could not have been obtained through coercion or duress or through dictation. We see no reason why the aforesaid statements made in the circumstances of the case should not be considered, looked into and relied upon.

19. We are of the considered opinion that it is established from the record that the aforesaid statements were given by the concerned persons out of their own volition and there is no allegation of threat, force, coercion, duress or pressure Page 10 of 22 being utilized by the officers to extract the statements which corroborated each other. Besides, the Managing Director of the Company on his own volition deposited the amount of Rs. 11 lakhs towards excise duty and therefore in the facts and circumstance of the present case, the aforesaid statement of the counsel for the respondents cannot be accepted. This fact clearly proves the conclusion that the statements of the concerned persons were of their volition and not outcome of any duress.

25. Due to the aforesaid reasons and on the basis of the materials available on record it is clear that the Company Page 14 of 22 was guilty of clandestine removal of excisable goods as non-excisable goods in order to evade excise duty. It is proved from the fact that the Managing Director voluntarily came forward to sort out the issue and to pay the Excise duty and paid Excise duty to the extent of Rs. 11,00,000/-

26. Therefore, according to us the issue with regard to the clandestine removal of excisable goods as non-excisable goods by the respondent from their premises and selling to its dealers and distributors is clearly proved from the materials on record.

27. In view of the aforesaid position and since there was clandestine removal of excisable goods, the period of limitation in the present case would have to be computed from the date of their knowledge, arrived at upon raids on the premises. In the present case therefore the extended period of limitation would be available as there was Page 15 of 22 suppression of facts by the respondents with the intention to evade the central excise duty inasmuch as they did not account for the manufactured goods in the prescribed record.

34. Therefore, it is not necessary that "Brand name"

35. Unfortunately, the Tribunal did not consider and properly appreciate the apparent distinction between the two distinct expressions i.e. "House mark" and "Brand name" and thereby proceeded to set aside the well-written Judgment passed by the Commissioner of Central Excise, Mumbai who has recorded his reasons giving cogent basis for his reasoning.

While the House mark represents the image of the enterprise from which the goods emanate, the Product mark is the means by which goods are identified and purchased in the market place and it the focal point of presentation and advertisement."

38. The Tribunal committed manifest error in coming to its conclusion and therefore the order passed by the Tribunal is set aside and the order dated 27.02.2002 passed by the Commissioner of Central Excise, Mumbai is restored.

39. The appeals are allowed to the aforesaid extent but leaving the parties to bear their own costs.

...............................................J (Dr. MUKUNDAKAM SHARMA) ...............................................J (ANIL R. DAVE) NEW DELHI, AUGUST 09, 2011.

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