[Order per : Archana Wadhwa, Member (J) (for the Bench)]. - All the matters are being disposed of by a common order as they arise out of same impugned order passed by the Commissioner vide which he has confirmed the demands against M/s. Golden Tobacco Ltd., M/s. Kanpur Cigarettes Ltd. along with imposition of penalties. In addition penalties stand imposed on other applicants.
2. Without going into the detailed merits of the matter, we find that Commissioner has confirmed the demand of duty of around Rs. 29.53 crores against M/s. GTC Industries Ltd., Mumbai and Kanpur Cigarettes Ltd., Kanpur. For better appreciation, we reproduce the relevant para of the impugned order :-
(i) Confirm and order recovery of demand of Rs. 29,53,36,551.65 (Rupees Twenty nine crore fifty three lac thirty six thousand five hundred fifty one and paise sixty five only) not paid during the period 14-9-90 to 31-1-95 should not be demanded from them under Rule 9(2) of the Central Excise Rules read with the proviso to Section 11A(1) of the Central Excise Act, 1944 from M/s. GTC Industries Ltd Mumbai and M/s. KCL Kanpur.
(ii) I further impose a penalty of Rs. 29,00,00,000/- (Rupees Twenty nine crore only) on jointly and severally on M/s. GTC Industries Ltd. Mumbai and M/s. KCL Kanpur under Rules 9(2), 52A 226 and 209 of the Central Excise Rules. I further impose a penalty of Rs. 29,00,00,000/- (Rupees Twenty nine crore only) on M/s. GTC Industries Ltd., under Rule 209A of the Central Excise Rules.
From the above reproduced part of the impugned order, we find that the demand stands confirmed against GTC and KCL along with imposition of penalties jointly and severely. According to the learned DR appearing for the Revenue, the joint confirmation is on the ground that though the cigarettes were actually being manufactured by KCL under a franchise agreement and are being sold to M/s. GTC Industries Ltd. It is actually the GTC Industries which is controlling party and as such, all the clandestine removal made by KCL have to be directed against M/s. GTC Industries Ltd.
3. On the other hand, it is the contention of the learned advocate that M/s. KCL was independent manufacturer of cigarettes and according to the well established law, the duty, if any, on the allegation of clandestine removal, in terms of provisions of Rule 9(2) of Central Excise Rules, has to be directed towards the manufacturer and not towards trade name owner or purchaser.
4. In any case, we find that adjudicating authority has not been able to make out his mind as to whether the duty has to be confirmed, if at all, against M/s. GTC Industries or KCL. It seems that on account of failure to come to conclusive finding as regards the evader of duty, he has found it easy to confirm the demands jointly and severely against both the parties. Apart from the imposing independent penalty of Rs. 29 crore to M/s. GTC Industries Ltd.
5. Legal issue as to whether demands can be confirmed jointly and severely was the subject matter of various decision of the Tribunal. One such reference can be made to Tribunals’ order in the case of Sree Aravindh Steels Ltd. v. Commissioner of Central Excise, Trichy - (Tri.-Chennai). Further, reference can be made to Tribunal’s decision in the case of Rimjhim Ispat Ltd. v. CCE, Kanpur - (Tri.-Del.) as also to the Hon’ble Gujarat High Court decision dated 13-4-2011 in the case of Commissioner v. Mahesh Harlalka vide which the Tribunal’s order setting aside the impugned order of the lower authorities confirming the demand jointly and severely, therefore set aside and the matter was remanded, stands upheld by High Court.
6. In view of the above settled position of law, we find merits in the prayer of the learned advocate that the impugned order is required to be set aside and matter is required to be remanded for reconsideration and fresh adjudication. Learned advocate has also raised grievance that relied upon documents were not provided to him, even though the show cause notice was issued on 30-9-1995 and they have made repeated requests for supply of the documents. Ultimately the appellant had to write to Commissioner vide their letter dated 3-8-2011 that in case, some of the documents were not available, they should be kept out of consideration and should not be relied upon by the adjudicating authority.
7. As per the learned DR, the supply of all the documents was completed and wherever the documents could not be supplied to them, the same has not been relied upon.
8. Learned advocate also has his grievance about the issue of cross examination of the certain deponents of statements, which was allowed by the Commissioner but on account of certain reasons, where the deponent could not make themselves available for cross examination, by referring to the provisions of Section 9(1) of Central Excise Act, he has not produced them for cross examination and has also relied upon the statements of said persons.
9. Learned DR submits that in some cases summons could not be served upon the deponent on account of non-availability of their address. If the appellant can help in serving the summon, they should be directed to do so. We make it clear that we have not gone into the merits of the case and are setting aside the impugned order on the sole ground of confirmation of demand and imposition of penalty jointly and severely on M/s. GTC and KCL. However, we make it clear that while adjudicating, the Revenue is expected to adhere to the principle of natural justice, as far as the same is possible and either supply the requisite documents to the appellant or to exclude the same from consideration, if not supplied. We leave it to the parties, to contest on the nature of the documents supplied/not supplied. Similarly, the issue of cross-examination would be dealt with by the adjudicating authority after taking into account the entire law on the issue.
10. With the above observation, we, after allowing the stay petition, set aside the impugned order and remand the matter for de novo adjudication in the light of observations made by us as above. Inasmuch as the matter is around 19 years old, we expect the AR Commissioner to do the re-adjudication as early as possible, but not later than 6 months from today. Needless to say that the appellant would co-operate in the adjudication proceedings and would not seek unnecessary adjournment.
11. All stay petitions as also appeals get disposed of in the above manner.
(Dictated and Pronounced in the open Court)
12. [Per : Rakesh Kumar, Member (T)]. - While I fully agree with the conclusion of my learned sister, I am of the view that certain very disturbing aspects of this matter which have not been dealt with in the order, need to be pointed out.
13. The duty demand of Rs. 29,53,36,51/- demanded from M/s. Kanpur Cigarette Ltd. and M/s. Golden Tobacco Industries jointly pertains to the period from 14th Oct.’90 to 31st March’95. The Show Cause Notice had been issued on 30-9-1995 demanding the duty mentioned above from M/s. Kanpur Cigarette Ltd. and M/s. Golden Tobacco Industries jointly and it also proposed imposition of penalty on them and other noticees. The allegation of duty evasion against M/s. Golden Tobacco Industries was based on a number of documents and oral evidence in form of statements. Since during the period of dispute, there was no provision for demanding interest on duty in the case of duty evasion and such a provision was introduced w.e.f. 28th Sept.’96 by inserting section 11AB, the interest on the duty demanded could not be demanded under this section. While in this case the provisions of Section 11AB could not be invoked by the Adjudicating Authority for demanding Interest on duty, there was another provision - Section 11AA introduced w.e.f. 26-5-1995, which provided for charging of interest on duty demand confirmed under Section 11A(2) if the assessee failed to pay the duty demand confirmed within the period of three months from the date of Adjudication Order. This section was applicable to this case. Since the interest liability under section 11AA started only when Show Cause Notice demanding duty has been adjudicated and the duty demand confirmed, it was in the interests of the Department to adjudicate this matter involving revenue of about Rs. 29.53 Crores as early as possible. However, it is seen that the Department has taken about 18 years in supplying the relied upon documents and still the assessee’s grievance is that some of the relied upon documents asked for by them have not been supplied. Even after 18 years when this matter was adjudicated, the adjudication has been done in a most careless manner and without ensuring that all the relied upon documents and non-relied upon documents asked for assessee are supplied to them so that they could not use this grievance as a handle to delay the adjudication proceedings. The non-supply of relied documents as well as non-relied upon documents, is surprising as there was specific Circular No. 171/5/96-CX, dated 2-2-1996 of the Board in this regard according to which whenever any documents/records are seized, immediate efforts must be made to segregate the documents which are proposed to be relied upon in framing/establishing the charges, from the remaining documents/records and once the Show Cause Notice has been issued, the documents/records which have not been relied upon, may be returned to the party under proper receipt and the assessee must also be allowed to obtain photocopies of the documents relied upon documents. Not only this, Rule 24A of Central Excise Rules, 2002 introduced vide Notification No. 17/09-C.E., dated 7-7-2009 provides that the books of accounts or other documents seized by the Central Excise officers, produced by the assessee or any other person, which have not been relied upon for the issue of notice under the Act or the Rules made thereunder, shall be returned within thirty days from the issue of the said notice. In this case, the Board’s instructions regarding timely supply of relied upon documents and return of the non-relied upon documents and even the provisions of Rule 24A, in force w.e.f. 7-7-2009, have been violated. Even after 18 years, the matter has been adjudicated in such a careless manner, that the Tribunal has no options but to remand the same for de novo adjudication.
13.1 Similar observations had been made by the Tribunal in its order reported in (Tri.-Del.) = (T) in respect of another case against M/s. Golden Tobacco Ltd. involving duty of Rs. 49,63,87,299/- for the period from Oct.’92 to March’92 and which had been handled in a similar careless manner. There is another matter against M/s. Golden Tobacco Ltd. involving duty of Rs. 30,85,63,693/- for the period prior to Sept.’96 and dealt with in Tribunal’s Order reported in (Tri.-Del.), which has also been handled in the same manner. In both these cases involving total duty of about Rs. 81 Crore, the adjudication have been delayed on account of delay in supply of the relied upon/non-relied upon documents and Adjudication Orders passed after such a long delay had been passed in such a careless manner that the same had to be remanded for de novo adjudication.
13.2 In all the three cases against M/s. Golden Tobacco Ltd. where the duty involved is about Rs. 110 Crores and which pertain to the period prior to Sept.’96, to which the provisions of Section 11AB were not applicable, it was in the interests of the Department to complete the adjudication proceedings as early as possible so that the interest on duty under Section 11AA could be charged for the period of delay in payment of duty demand confirmed, if the assessee failed to pay the same within three months from the date of adjudication order. Delay in Adjudication has benefited Golden Tobacco Ltd. as they have been able to avoid interest liability under Section 11AA which starts only on the expiry of three months from the date of adjudication order confirming the duty demand.
14. The Commissioner, therefore, must ensure that the de novo adjudication proceedings are completed in terms of the Tribunal’s directions strictly within the time limit specified in this order. The Registry is also directed to endorse a copy of this order to the Chairman, Central Board of Excise and Customs.