1. In this writ petition the challenge is the demand of excise duty of a sum of Rs. 27,040.74 P. on goods stated to have been removed without obtaining the gate pass plus a levy of Rs. 2,000/- by way of penalty.
2. The petitioner is manufacturer of Mill Board, Grey Board and Straw Board. It appears that on 25th December, 1965 certain premises of the petitioner Company were searched by officers of the Central Excise. The scrutiny of the private account books and other Central Excise records showed to the Excise Authorities revealed that there had been an excess removal to the extent of 27614.500 Kgs. during the period 1st January, 1962 to 24th December, 1965.
3. A show cause notice dated 28th May, 1966 was issued by the Excise Authorities to the petitioner. In the said show cause notice it was stated that the aforesaid goods have been removed in excess 'without payment of Central Excise duty amounting to Rs. 1,11,161.56 and without cover of any gate pass'. It was further stated that the manufacture of these excess products had also not been recorded in the excise records maintained by the petitioner. The petitioner was, accordingly, asked to show cause as to why penalty should not be levied on it under rules 9, 52A and 226 of the Central Excise Rules and, further, why duty on 2,76,164.500 Kgs. of Mill Board and Grey Board should not be levied.
4. A reply dated 13th February, 1967 was sent, on behalf of the petitioner, through their lawyers. It was, inter alia, contended in the said reply that the show cause notice was issued without jurisdiction inasmuch as the claim was made beyond the time provided by rule 10 of the Central Excise Rules and was beyond the scope of rule 10A of the Rules. It was also denied that there has been any excess manufacture and/or removal from the factory. It was, however, admitted that there was a discrepancy between the actual weighment of the goods in the statutory record and the weighment shown in the sale record. The factors which led to the aforesaid discrepancy was stated to be as follows :
'(i) The weighment in the mills for the purpose of excise on the goods was without elaborate packing, while the weighment of the packets taken into account at the time of sale was the standard weighment with elaborate packing.
(ii) The weighment at the mills for the purpose of excise was strict while weighment for sale was merely notional and did not conform to the actual weight of the Board in the packet.
(iii) It was the practice in the trade to take standard packets as representing a certain weight, although the packet in fact never conformed to that weight, and at times the quantum of board in the packet was reduced to equalise variation in price without increasing the price of the packet.
(iv) A comparative study of prices would show that the price of packets containing the petitioners' board is lower than the prices of other brands and to offset this, the number of sheets in the petitioners' packet was reduced so as to conform to the prevalent price.
(v) The discrepancy was partly due to the fact that during the material period, a quantity of 89 tons of strawboard cuttings which were shown in the sale records had been purchased by the petitioners from the open market and were not the manufacture of the petitioners and could not be taken into account for the purpose of excise duty.
(vi) A part of the discrepancy arose on account of the fact that standard packets could be, and are sold, at the standard price even after, either reducing the number of sheets in the packets or, substituting sheets of lesser weight to offset the price fluctuation in the market.
(vii) Another factor contributing to discrepancy was that the packets, after being transferred for the purpose of sale to the Head Office were tied with six layers of thick strings and the flaps which were used in the factory for packing were replaced at the Head Office by thick board of larger size. In this way the total weight of the packet was increased to some extent.
(viii) If often happened that the bundles of board while stored in the Head Office after removal from the factory remained exposed to dampness thereby increasing the weight of the packets.'
5. The petitioner was afforded further opportunity for filing material before the Excise Authorities. Personal hearing was also granted to the petitioner by the Collector of Central Excise, Kanpur. Ultimately order dated 16th May, 1967 was passed by the Collector of Central Excise, Kanpur. In the impugned order it was held that the petitioner had contravened the provisions of Rules 9, 52A and 226 of the Central Excise Rules and had removed 268202 Kg. of mill board and gray board in excess of clearance shown in the Excise records. By the said order the petitioner was required to pay duty amounting to Rs. 1,12,644.84 P. plus special duty of 20% of basic duty. A penalty of Rs. 2,000/- was also imposed on the petitioner.
6. The petitioner filed an appeal to the Central Board of Excise & Customs challenging the aforesaid order of the Collector. By order dated 8th March, 1968 the Board confirmed the order of the Collector of Central Excise with regard to the question as to the legality of the aforesaid demand, The petitioner got partial relief as, with regard to the question as to the determination of appropriate duty demanded by the Collector of Central Excise, the Board accepted the contention of the petitioner.
7. Thereafter the petitioner filed a revision petition before the Central Government under section 36 of the Central Excise & Salt Act. The petitioner raised the contention that on merits there had been no excess clearance and secondly the demand was barred by limitation. The revision was, however, not accepted and by order dated 30th April, 1969 the same was dismissed. Arriving at this conclusion the Central Government held that it entirely agreed with the findings of the Board. In the present writ petition the aforesaid orders are sought to be impunged.
8. The main contention on behalf of the petitioner is that in the instant case, rule 10 is applicable and admittedly the show cause notice has been issued beyond the period of limitation prescribed therein.
9. In order to decide the applicability of rule 10, it is necessary to refer to the relevant portions of Rules 9, 10, 10A, 52 and 52A which are as under :
'9. Time and manner of payment of duty. - (1) No excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in this behalf whether for consumption, export, or manufacture of any other commodity in or outside such place, until the excise duty livable thereon has been paid at such place and in such manner as is prescribed in these Rules or as the Collector may require and except on presentation of an application in the proper form and on obtaining the permission of the proper officer on the form.
(2) If any excisable goods are, in contravention of sub-rule (i) deposited in, or removed from, any place specified therein, the producer or manufacturer thereof shall pay the duty livable on such goods upon written demand made by the proper officer, where such demand is delivered personally to him, or is left at his dwelling house, and shall also be liable to a penalty which may extend to two thousand rupees, and such goods shall be liable to confiscation.
10. Recovery of duties or charges short-levied, or erroneously refunded. - When duties or charges have been short-levied through inadvertence, error, collusion or mis-construction on the part of an officer, or through misstatement as to the quantity, description or value of such goods on the part of the owner, or when any such duty or charge, after having been levied, has been owing to any such cause, erroneously refunded, the person chargeable with the duty or charge, so short-levied, or to whom such refund has been erroneously made, shall pay the deficiency or pay the amount paid to him in excess, as the case may be, on written demand by the proper officer being made within three months from the date on which the duty or charge was paid or adjusted in the owner's account-current, if any, or from the date of making the refund.
10.A. Residuary powers for recovery of sums due to Government. - Where these Rules do not make any specified provision for the collection of any duty, or of any deficiency in duty if the duty has for any reason been short levied, or of any other sum of any kind payable to the Central Government under the Act or these Rules, such duty, deficiency in duty or sum shall, on a written demand made by the proper officer, be paid to such person and at such time and place, as the proper officer may specify.
52. Clearance on payment of duty. - When the manufacturer desires to remove goods on payment of duty, either from the place or premises specified under rule 9 or from a store-room or other place of storage approved by the Collector under rule 47, he shall make application in triplicate (unless otherwise by rule or order required) to the proper officer in the proper form and shall deliver it to the officer at least twelve hours (or such other period as may be elsewhere prescribed or as the Collector may in any particular case require or allow) before it is intended to remove the goods. The officer, shall, thereupon, assess the amount of duty due on the goods and on production of evidence that this sum has been paid into the Treasury or paid in the account of the Collector in the Reserve Bank of India or the State Bank of India, or has been dispatched to the Treasury by money-order shall allow the goods to be cleared.
52A (1) Goods to be delivered on a gate pass. - No excisable goods shall be delivered from a factory except under a gate pass in the proper form or in such other form as the Collector may in any particular case or class of cases prescribe signed by the owner of the factory and countersigned by the proper officer.
10. The aforesaid contention of the petitioner has no merit. It will be seen that the show cause notice, which was issued, clearly stated that goods had been removed by the petitioner without cover of gate pass. The findings of the Excise Authorities are also the same. The Collector, as well as the Central Board of Excise and Customs and the Central Government, have come to the conclusion that the aforesaid goods had been removed by the petitioner not only without taking out gate pass in respect of the same but the manufacture of the said goods has also not been recorded in the excise records. The contention of Shri Chandrashekhran is that rule 10 would not apply because there was never any mis-statement as to the quantity, description or value of the goods on the part of the petitioner. The contention is that if a gate pass had been issued in respect of the goods in question, then that may possibly be a case covered by rule 10. Where, however, the goods have been cleared without the petitioner having issued a gate pass, it would mean that the petitioner has not made any statement at all with regard to the quantity of the goods sought to be cleared. In such a case rule 10 would not be applicable. This, to my mind, is the correct interpretation of rule 10. Apart from the fact that rule 10 may not apply where assessment has not taken place, it is evident that rule 9(2) and rule 10 have to be read harmoniously. Rule 9(2) would apply in every case. Where, however, there has been a mis-statement on the part of the petitioner with regard to the quantity, description or value of the goods which are cleared, rule 10 would apply. As already observed, a mis-statement can take place only if some statement has been made in respect of those goods by the petitioner. The finding of fact of the Excise Authorities in this case is that in respect of the goods in question no statement at all was made, either in the excise records or by issuance of the gate pass. This being the case, the provisions of rule 10 can have no application and the case would be covered by rule 9(2) or even rule 10A.
11. It will further be seen that rule 10 applies only in case of a short-levy. Rule 10 postulates an assessment having been made under rule 52. Where, however, the goods are removed under rule 9 without assessment under rule 52 having taken place, then rule 10 would not be applicable. This clearly follows from the dictum laid down by the Supreme Court in the case of Assistant Collector of Central of Central Excise, Calcutta Division v. National Tobacco Co. of India Ltd. - : 1978(2)ELT416(SC) . It is contended by Shri Arora that there is nothing on record to show as to whether there had been assessment under rule 52 or not prior to the clearance of the goods. This contention is correct. Nothing on record has been pointed out to me which would show that the goods had been removed on provisional assessment or without assessment or after assessment. Nevertheless, in view of the fact that in respect of the goods in question, no statement or mis-statement at all had been made by the petitioner, the provisions of rule 10 are not attracted.
12. It is next contended by Shri Arora that the onus is on the department to prove that the goods had been removed in excess. It is contended that this onus had not been discharged by the respondents. In this connection Shri Arora has relied upon Shanti Prasad v. Director of Enforcement, : 2SCR297 . Reference has also been made by him to Hanumant v. State of M.P., : 1953CriLJ129 and Union of India v. H. C. Goel, : (1964)ILLJ38SC wherein it has been held that a finding an not be given on a mere suspicion. In my opinion the initial onus, which was on the respondents, has been discharged by them. The very fact that there was discrepancy in the sales made and the quantity stated to have been removed would show that, prima facie, there has been an excess removal on the part of the petitioner. The fact that such a discrepancy exists has not been disputed by the petitioner. The petitioner has sought to explain this discrepancy. The petitioner admitted that there had been an excess sale of boards to the extent of 275 metric tonnes. Briefly stated, the Explanationn of the petitioner was as follows :-
(1) 'Goods purchased from outside and notmanufactured in the factory : 87 M.Ts.(2) Clerical error in bills No. 101, dated20-11-63 and No. 089, dated 2-7-63. 9 M.Ts.(3) Weight shown higher (9 oz. as against8 oz.) in order to get better pries onlesser quantity. 112 M.Ts.(4) Extra packing Material used andmoist are in the packages. 67 M.Ts.----------275 M.Ts.----------
13. For reasons set out in detail in the order of the Collector of Central Excise the said Explanationn was not accepted. Under those circumstances it must be held that the initial onus, namely, the evidence on record show that there had been excess removal had been discharged by the respondents and the petitioner, thereafter had not been able to rebut the same.
14. It is then contended by the learned counsel for the petitioner that its evidence had been rejected on flimsy ground. The adequacy of the material on the basis of which findings of fact are arrived at by the Authorities under the Act cannot be gone into in these proceedings under Article 226 of the Constitution. Moreover, the order of the Collector of Central Excise, whose findings have been accepted in appeal and in revision, does not show that the evidence has been rejected on flimsy ground at all. The Explanationn of the petitioner has been carefully considered and examined by the Collector but was not accepted by him. I do not propose in these proceedings to go into the disputed questions of fact at this stage.
15. It was lastly contended by the learned counsel that the orders of the Central Board of Excise & Customs and the Central Government are non-speaking orders. Relying upon M/s. Travancore Rayons Ltd. v. Union of India and others, : 1978(2)ELT378(SC) , it is contended that the said orders should be quashed. I am unable to agree with this contention. The Collector of Central Excise has given detailed reasons while passing the impugned order against the petitioner. The Central Board of Excise & customs applied its mind to the submissions urged by the petitioner on merits of the case. The order, no doubt, is brief but it does contain the reasons for dismissal of the appeal filed by the petitioner. As far as the Central Govt. is concerned it observed as follows :-
'The Government of India having considered all the facts of the case entirely agree with the findings of the Board.'
16. It was not necessary, to my mind, for the Govt. of India to have repeated all the findings of the Board. It was sufficient to state that it agreed with the said findings. Adopting such a course would not amount to violation of principles of natural justice in any way. A non-speaking order would be one where a person is unable to find any reason on which the conclusion is based. Such is not the case here. The reasons for the Government to reject the revision petition are the same as those which weighed with the Central Board and were contained in the Board's order.
17. For the reasons aforesaid, the writ petition is dismissed with costs. Counsel's fee Rs. 550.