S.L. Peeran, Member (J)

1. The Revenue and the Party are aggrieved with Order-in-Appeal No. 708/2002 dated 31.12.2002 passed by the Commissioner (A), Cochin confirming demands for the period 1995-96 to 1997-98 in terms of the show cause notice dated 8.6.2000 invoking larger period.

2. The Revenue is aggrieved with less imposition of penalty and seeks for imposition of penalty under Section 11AC of thewhen the fact that the said provision was in existence during the period of contravention.

2.1 The appellants ground for challenge are two folds, in the first instance, it is stated that the show cause notice has been issued after a lapse of 848 days after the Mahazar was recorded on 10.2.1998.

3. The Mahazar which is at Page 59 of Departments paper-book is referred to by the learned Counsel and points out to Sl. No. 28 at page 63 to show that the appellants had been filing all the returns and declarations. The appellants are relying on enormous evidences to show that what was manufactured and cleared was not only furniture but doors, shutters, window frames, ventilators, etc. The statements of several persons like Mauelsons Housing Development Company; Dr. C. D. Joseph; Sacred Heart Latin Catholic Church; P. P. Francis; Trishul Town Gold Dealer Association; Dr. C. Mathew John; S. Rajan; C. J. Lazar; Hotel Malabar Palace; Dr. C. E. Sivadas, Thrissur; S. Padmanabhan of Thrissur; K. P. Achutan; Hotel Skylord; Dr. C. C. Abraham had been produced by the appellants. The same is reflected in the Revenues paper-book at page Nos. 408 - 455 and page Nos. 452-455, the same has not been examined by the Commissioner (A). It is stated by the learned Counsel that even in terms of the show cause notice, the demands have not been properly computed. It is pointed out that the quantum of the show cause notice reflected in page No. 56 of the Revenues paper book refers to the quantification in Annexure-C. Annexure -C which is at page 405 of the Departments paper-book records in the last page with a note "the rates were taken from pre-estimates, invoices, pricelists and from the slips, where comparative rate is hot available only token amount (say 1000, 2000, etc.) shown as value".

3.1 The learned Counsel submits that in terms of Apex Court judgment rendered in the case of Nizam Sugar Factory v. CCE 2006 (197) ELT 465 (SC), the demands cannot be confirmed as the demands are barred by time. He further submits that the Revenue has failed to produce evidence pertaining to the quantification of receipt of raw materials, manufacture of furniture and supplies to individuals. The statements given by several persons had been explained by the appellants in their reply to the show cause notice, which is at pages 408 to 433 of the Revenues paper-book, the same has not been examined nor considered by the Commissioner (A). The gist of statements recorded was brought to the notice of the Commissioner (A) in the reply to show that what was cleared was not furniture. Even for the allegation pertaining to clearance of furniture, no evidence has been produced except certain private registers and notebooks which cannot be considered as authentic evidence. There is no corroboration for confirming the demands and hence, the learned Counsel seeks for setting aside the demands both on time bar as well as on merits. He submits that the Departments appeal is to be rejected as the prayer for enhancement of penalty and for imposing penalty under Section 11AC does not arise, as the said Section was not in force during the period of contravention. He relies on the gist of case-laws given in tabulated form, which is noted below.

Sl. No.

Citation

Gist

1.

Nizam Sugar Factory v. Collector 2006 (197) ELT 465 (SC)

All relevant facts in the knowledge of the department when the first show cause notice was issued -while issuing similar subsequent show cause notice same/similar facts could not be taken as suppression of facts on the part of the assessee as the facts were already in the knowledge of the authorities.

2.

Mopeds India Ltd. v. CCE (T) maintained by the Supreme Court in Collector v. Mopeds India Ltd. 991 (53) ELT A79 (SC).

Department aware of malpractices of the party on the date of search on 23.10.1975 but show cause notice issued on 5.1.1997 - held that department was not entitled to recover differential duty as the same was time barred.

3.

Gammon India Ltd. v. CCE maintained by the Supreme Court in 2002 (146) ELT A313 (SC)

Show cause notice issued after two years of completion of enquiry -held that demands are time barred.

4.

J.S.L. Industries Ltd. v. CCE 1999 (109) ELT 316 (T)

Relevant information supplied by assessee as desired by department on 1.9.1987 and show cause notice issued on 6.9.1989 to be bared by time.

5.

Rivaa Textile Industries Ltd. v. CCE 2006 (197) ELT 555 (T)

Officers visited factory premises on 28.9.1996 and drew factual panchnama on 20/21.9.1996 and show cause notice having been issued after six months latter demands held to be time barred.

6.

Tisco Ltd. v. CCE 2006 (199) ELT 855 (T)

From date of visit of the revenue officers to the factory of assessee, department having knowledge about activities, but no show cause notice issued for a period of six months prior to that date held that the demand was time barred.

7.

Lovely Food Industries v. CCE 2006 (195) ELT 90(T)

Department gathered information on their visit to factory on 5.11.1999 - held that show cause notice issued on 25.7.2002 barred by limitation.

8.

TGL Poshak Corporation v. CCE

Mere notebooks and private accounts maintained by workers cannot be the basis to sustain a demand as corroborative evidence.

4. The learned JDR submitted that the Commissioner (A) has examined the entire evidence and has rightly confirmed the demands. The same should be sustained and the penalty imposed should be enhanced in terms of the prayer made in the Revenue appeal.

5. On a careful consideration and perusal of the entire records, we notice that the Mahazar drawn by the Department on 10.2.1998 which is at page 59 of the paper-book. In terms of the drawal of the Mahazar, it is seen at page 63 of the paper-book that the appellants has been filing the declaration for manufacture of goods in their factory. The entire statements recorded from the workers and several other persons discloses that the appellant was not only supplying furniture but also supplying doors, door frames, ventilators, window frames other than furniture. They had produced enormous evidence in the form of the letters from the respective parties to show that what was received was not furniture. The Commissioner (A) has not adverted to these evidence and has held that what was cleared in terms of the notebooks seized from the appellants was furniture. Even in terms of the quantum shown in Annexure - C, the department has not properly quantified the amount on furniture as to what is the quantum of furniture clandestinely removed has not been brought out explicitly in the show cause notice nor in the impugned orders. The quantum of furniture cleared clandestinely ought to have been properly brought out in the show cause notice, which has not been done. Furthermore, there is no independent corroborative evidence to show that appellants had manufactured furniture and cleared the same without payment of duty. The entries in the private notebooks cannot be the sole evidence. For lack of evidence and non-examination of the counter evidence produced by the assessee to show that they had not made clearances, is a fatal to the proceedings. The demands cannot be confirmed for lack of evidence in the matter. The demands on allegation of clandestine removal, is therefore set aside.

5.1 Furthermore, we notice that all the details pertaining to manufacture and clearance including the declaration filed by the appellants were seized under Mahazar dated 10.2.1998, there was no other information required by the department for issue of show cause notice. There is inordinate delay of 848 days in issuing the show cause notice. In terms of the Apex Court judgment rendered in the case of Nizam Sugar Factory (supra) and several other judgments cited supra in the tabulated column, we hold that the demands are barred by time. In the result the partys appeal is allowed.

5.2 The departments prayer is for enhancement of penalty under Section 11AC. The said section was not existence while the said offence was committed. As the appellants have succeeded on merits, the departments appeal is liable to fail and the same is rejected.

(Operative portion of this Order was pronounced in open court on conclusion of hearing)