JUDGMENT: SYED SULTAN AHMAD, MEMBER (JUDICIAL).--(1). This appeal has been filed against the Order-in- Original No. 19/2002 dated 19.04.2002 passed by the Collector, Customs, Sales Tax and Central Excise (Adjudication), Rawalpindi, Regional Office, Custom House Jamrud Road, Peshawar.
2.Brief facts of the case are that Superintendent Sales Tax & Central Excise Haripur reported that during the course of Audit of M/s. Bestway Cement Ltd., Hattar by Audit party of DGRRA Lahore, it was pointed out that during scrutiny of RT-3 for the quarter ending 9/98 (7/98 to 9/98) submitted by M/s. Bestway Cement Ltd. Hattar, it was observed that raw material was short accounted for as detailed below:-- Raw Material ConsumedQuantity Consumed M.
TonsRaw Material to be produced M.
Ton
1. Lime Stone 191234
2. Cloy 47244
3. Slate stone 10155
4. Sand 350
5. Laterite 1925 Total 250908 Raw material accounted For = 242726 MT Raw Material Short Accounted for = 8182 Due to short account of raw material of 8182 M. Tons Clinker, was shown short produced to the extent of 5211.46 M.T. (1.57=1) which ultimately resulted in short payment of Central Excise Duty of Rs.
62,12,060/- (Value of Rs. 2980/MT as on 23.09.98 to 30.09.98 has been taken for calculation of duty).
Thus the unit violated section 3, 3(b) of the Central Excises Act, 1944 & Rule 7, 9 & 210 of the Central Excise Rules, 1944. The show cause notice C. No. CE (Adj) C/63/2001 to this effect was issued on 01.09.2001. The Collector (Adjudication) after hearing the parties vide impugned Order-in-Original No. 19/2002 held that the appellants committed the procedural lapses i.e. the RT-3 for the period July-September, 1998 was not properly maintained. He imposed the penalty of Rs. 25,000/- upon the appellants and warned them to be careful in future with the direction to properly maintain Central Excise record. Feeling aggrieved of the order-inoriginal, the appellants filed the instant appeal mainly on the following grounds:-- (a)That the impugned order is against facts and law of the case.
(b)That the Respondent was not justified in holding that RT-3 for the period July-Sept,1998 was not properly maintained when evidence pointed to the contrary.
(c)That the Respondent was not justified in law in imposing penalty under rule 210 of the Central Excise Rules, 1944 in peculiar circumstances of the case. (d)That the Respondent erred at law by issuing "Warning" coupled with direction to properly maintain Central Excise record when no lapse as such discovered during the adjudication proceedings.
3.The learned counsel for the appellants during the hearing of this case reiterated the above arguments and requested that the appeal may be accepted and the impugned order-in-original be also set aside. The learned Departmental Representative controverted the arguments of the learned counsel for the appellants and requested that the appeal may please be dismissed.
4. I have heard the arguments advanced by both the sides and have perused the record minutely.
Learned Counsel for appellant contended that the order under appeal is based on surmises and conjectures and that there was no justification to impose penalty under Rule 210 of Central Excise Rules, 1944. Conversely, the learned D.R. defended the impugned order.
5.It would be quite apt to reproduce the operative paras (7) & (8) of the impugned order. The same read as under: "(7)The aforesaid facts and figures indicate that the raw meal found short to the extent of 8182 MT during quarter July-Sept 98 was accounted for in the subsequent period as is evident from table in para 5 above. However it has also been noticed that though the audit of the Unit was conducted in June, 2000 but no in depth exercise was undertaken by the audit team to cross check the (i) quantity of raw meal issued for process (ii) wastages (iii) Clinkers to be achieved (iv) Clinker achieved and (v) shortage noticed during the period July 98 to June, 2000. The Collect orate of Sales Tax & Central Excise Peshawar, in order to ascertain the factual position may carryout detailed audit of the Unit for the Period 1998-2001. If the audit report reveal evasion of central excise duty by the Unit, then contravention report be framed against the respondent unit by invoking rule 10(3) of the Central Excise Rules, 1944.
(8)However, in view of procedural lapse committed by the Unit i.e. the RT-3 for the period July-Sept 98 was not properly maintained, I impose penalty of Rs.
25,000/- (twenty five thousand only) against he Unit under Rule 210 of Central Excise Rules, 1944.
The respondent Unit is also warned to be careful in future with direction to properly maintain Central Excise record." It becomes abundantly clear from the above conclusion of the forum below that no lapse on the part of the appellant was found. If this was the situation then there was no justification to impose any penalty. This aspect is enough to hold that the imposed order is not tenable in law. Even the tenor of the impugned order is suggesting this conclusion.
6. The last but not the least is that in the instant case the audit was got conducted by Audit Party of DGRRA, Lahore which is the staff of Director General of Revenue Receipts Audit. It is a branch of Auditor General of Pakistan and its officers are neither Central Excise Officers under clause (8) of section 2 of the Central Excises Act, 1944 nor they are authorized by the Collector of Central Excise concerned under rule 197 of the Central Excise Rules, 1944 to have access to premises, equipments, stocks and accounts of any licenced premises. They do not even fall in the category of officers mentioned in section 15 of the Central Excises Act, 1944 who are required to assist Central Excise Officers in the execution of the aforesaid Act. Staff of DRRA is non-existent authority under the Central Excises Act, 1944. Such a non-existent authority cannot have access to the books of accounts and other record under the Central Excise Laws. Their charter of function is given in Notification No. SRO 1195(1)/90, dated 17.12.1990. Notification No. S.R.O. 1195(1)/90, dated 17th November, 1990 reads as under:-- "In exercise of the powers conferred by clause (a) of sub-paragraph (2) of paragraph 11 of the Pakistan (Audit and Account) Order, 1973 (President's Order No. 21 of 1973), and in supersession of this Divisions Notification No. S.R.O. 800(1)/87, dated the 6th October, 1987, the president is pleased to require the Auditor-General of Pakistan to Audit the receipts of the Federal Government falling under the following Heads, namely:-- (a)0110000 Taxes on Income.
(b)0120000 Property and Wealth Tax.
(c)0140000Capital Gains Tax.
(d)0160000Workers Welfare Tax.
(e)0170000 Tax on professions, Trades and Callings.
(f)0180000Capital Value Tax.
(g)0210000 Customs.
(h)0220000Sales Tax.
(i)0230000Federal Excise.
(j)0240000Federal Excise on Natural Gas.
(k)0290000Other Indirect Taxes.
The results of audit shall be included in the report to be submitted by the Auditor-General of Pakistan to the president".
7. It becomes vivid from the perusal of above notification that the President of Pakistan has required the Auditor General of Pakistan to Audit the receipt of Federal Government and not the record of the industrial units licensed under the Central Excise Laws. Thus the whole exercise conducted by the D.R.R.A. in this particular case is quorum non-judice.
8. The resume of the above discussion is that the instant appeal is bound to succeed. It is hereby accepted and the order under appeal is set aside.
9. Announced.
10. The parties be informed accordingly.