1. This is an application for reference to the High Court of Judicature at Madras under Section 35G of the Central Excises and Salt Act, 1944.
2. The brief facts may be relevant to consider the question as to whether any point of law arises meriting a reference to the High Court.
On 24-1-81, the Superintendent of Central Excise, Preventive Unit, Kumbakonam, with his staff intercepted a lorry bearing No. MDY 8021 which was coming from Vadapathimangalam, near a place known as Lakshmangudi, and the lorry was found to contain 18 barrels of molasses which were being transported without any gate pass or transport document evidencing payment of excise duty. The owner of the molasses present in the lorry gave a statement confessing to the fact that, as he had done on previous occasions, in the instant case, he was transporting 18 barrels of molasses from the appellant-sugar mills and this was also confirmed by the statements of the lorry driver and the cleaner and corroborated by the relevant endorsement in the goods vehicle record relating to the lorry in question. A scrutiny of the records in the appellant-sugar mills by the officials also revealed shortages in R.G. 1 register. Samples were drawn from the 18 barrels under seizure as well as from the surge tank and the earthen tanks in the appellant's factory and were sent for chemical analysis. The Chemical Examiner confirmed by his report that the samples were of the same chemical composition. Proceedings were initiated by the Assistant Collector and penalties were imposed on the owner of the molasses, Dwaraka Prasad Sharma and others and action was dropped against the appellant, as against which the Collector, exercising the powers under Section 35E(2) of the Act, imposed a penalty of Rs. 1,000/- on the appellant under Rule 173Q of the Central Excise Rules, 1944. This was on appeal confirmed by this Tribunal by its order dated 20-7-83 in appeal No. ED(MAS) 123/83 out of which the present reference application arises.
3. The learned counsel appearing for the applicant submitted that the following questions of law arise out of the said order of the Tribunal meriting a reference to the High Court under Section 35G of the Act : (1) When there are two sets of evidence, one recorded in favour of the appellant and the other against the appellant, reliance cannot be placed on either of them.
(2) When the report of the Chemical Examiner has not been mentioned in the show cause notice by the reviewing authority, viz., the Collector of Central Excise, reliance placed on the same by the reviewing authority and confirmation of the same by the Tribunal is contrary to law.
(3) Discrepancies in the R.G. 1 register of the appellant relating to the molasses in question not having been brought out in the show cause notice specifically should not be legally relied upon by the reviewing authority, viz., the Collector of Central Excise, much less by the Tribunal.
4. The learned Senior Departmental Representative opposed the reference application and contended, inter alia, that :- (1) The order of the Tribunal is based on an appreciation of the evidence on record and no question of law at all arises for reference to the High Court as per law. When the appellant has cross-examined the witnesses during the review proceedings before the Collector and for valid reasons the Collector has chosen to place reliance on the statement recorded from the witnesses at the earliest point of time and rejected the subsequent retraction of the statements by the witnesses on the ground that the witnesses had evidently been won over, it is purely an appreciation of the evidence on record, and even if it is erroneous or a different conclusion can be reached on the same, it would not be a question of law for reference to High Court.
(2) The appellant-sugar mills never challenged or assailed the correctness or validity of the report of the Chemical Examiner either in their grounds of appeal before the Tribunal nor pleaded before the Tribunal any prejudice on the ground that reliance had been placed by the reviewing authority on the report of the Chemical Examiner. Not having specifically taken a ground on this aspect earlier in the appeal before the Tribunal, it is not open now to them to canvass the correctness of the Chemical Examiner's report at this stage for reference.
(3) R.G. 1 registar is a register maintained at the appellant-sugar mills which did indisputably contain discrepancy and shortages with reference to the stock of molasses, and this aspect has been brought to the notice of the appellant even at the earliest point in the original show cause notice issued to the appellant by the Assistant Collector and therefore, non-mention of the same once again in the show cause notice of the reviewing authority will not in any way prejudice the appellant. More important than that is the fact that appellant never even assailed the order-in-review of the Collector on the ground that the R.G. I register discrepancy had not been mentioned in the show cause notice; nor pleaded any prejudice on that score before the Tribunal. When the appellant-sugar mills themselves admittedly did not argue this point at all and hence not covered by the order of the Tribunal the question of making a reference in that regard would not just arise.
5. The question that arises for consideration in the above matter is whether any question of law arises out of the order of the Tribunal referred to supra, meriting a reference to the High Court. So far as the appreciation of evidence is concerned, I agree with the submissions of the learned Senior Departmental Representative that it is a question of fact and not question of law. This is a case where witnesses have been examined and statements recorded by the Central Excise authorities at the earliest opportunity, immediately after seizure whererin they have clearly implicated the appellant. Merely because after considerable length of time during review proceedings the witnesses turned hostile, it does not mean that under law the entire testimony will have to be discarded in toto. Moreover, this question is purely academic in the circumstances of this case because the order-in-review of the Collector is based mainly on the goods vehicle report relating to the lorry in question, unchallenged report of the Chemical Examiner and discrepancy in the R.G. 1 register of the appellant-sugar mills themselves relating to the stock of molasses. As a matter of fact, the Tribunal has also proceeded to affirm the order of the reviewing authority primarily on the basis of the entry in the goods Vehicle report, excess stock of molasses over and above the R.G. 1 balance and the unchallenged report of the Chemical Examiner. In my opinion, no question of law arises out of the order of the Tribunal in this regard for reference.
6. The appellant-sugar mills have not even taken a specific stand in the grounds of appeal that no reliance can be placed on the report of the Chemical Examiner because it was not mentioned once again, in the show cause notice issued by the reviewing authority. It was also fairly conceded by the learned counsel for the applicant that he did not argue this point before the Tribunal. In these circumstances, I fail to see how it is open to the applicant now to raise this issue and seek reference of the same to the High Court as a question of law. In my opinion, no question of law at all arises on this and the applicant-sugar mills not having raised it in the grounds of appeal and not having argued this point before the Tribunal are not entitled to rake up this in a reference application for the first time. Likewise, the submission of the learned counsel for the applicant regarding the non-mention of R.G. 1 register discrepancy in the show cause notice of the Collector is without any substance. When the appeal was argued before me the learned counsel never argued this point at all. As rightly pointed out by the Senior Departmental Representative, the applicant cannot raise new points neither pleaded in the appeal grounds nor argued before the Tribunal as they do not figures part of the order of the Tribunal. The scope of a reference application is restricted only to question or questions of law arising out of the order passed by the Tribunal. The applicant cannot supplement new points neither pleaded nor argued and seek reference of the same to the High Court.
Apart from it, the order of the Tribunal is fairly comprehensive covering the various factual aspects of the case and in my opinion no question of law arises or flows out of the order meriting reference to the High Court. The reference application is therefore dismissed.