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Judgment
N.C. Cables Limited, formerly known as National Cable Industries, has preferred this appeal against the order dated 8th February, 2013 passed by Customs, Excise and Service Tax Appellate Tribunal. Learned counsel for the appellant submits that the order passed by the tribunal is perverse as it has been wrongly recorded that four units from whom the appellant had made purchases and claimed Modvat credit were found to be fictitious. In fact two units were found to be fictitious and two units were in existence. He further submits that statements of Sunil Kejriwal and K.C. Kejriwal recorded u/s 14 of the Central Excise Act, 1944 have been relied but they were not produced and made available for cross-examination.
We do not find the impugned order passed by the Tribunal to be perverse. This is the third round and the years involved are 1991 and 1992. Earlier the tribunal vide order dated 22nd January, 2003 had directed the Revenue to furnish copy of requisite documents such as statements of Sunil Kejriwal and K.C. Kejriwal and had remanded the matter to the Assessing Officer for fresh adjudication. The appellant was supplied copy of the statements and they had filed reply dated 18th November, 2005. The second adjudication order in original dated 28th February, 2006 was passed, but again the first appellate authority vide order dated 15th October, 2007 remanded the case to the Assessing Officer with a direction to the Revenue to produce all witnesses for cross-examination after making efforts in terms of Section 37C of the Excise Act. Thereupon, the third order in original dated 23rd December, 2008 was passed confirming excise duty of Rs. 2,39,120/- and equivalent penalty. On the question of cross-examination, the Assessing Officer in the order in original has recorded as under:
The party was given personal hearing on dated 07.05.08, 24.05.08, 19.06.2008, 10.09.2008, 10.10.2008, 23.10.2008 and 5.11.2008. On 23.05.2008, Shri P.C. Jain, Advocate appeared for personal hearing. He was informed that letters could not be served to Shri Kejriwal as the flat was locked and the letters were also pasted at their known residential address and a Panchnama was drawn. However, Shri P.C. Jain, Advocate was not satisfied about the procedure that was being followed. He insisted that the procedure that is being prescribed u/s 37C should be adopted and only after that revised submissions may be submitted by them and they should be informed that witnesses are not traceable. He submitted that he had nothing else to state.
On this basis the procedure u/s 37C was adopted. Since Shri K.C. Kejriwal and Shri Sunil Kejriwal were not available, the PH letter was pasted at the residential premises. However, one Shri Gopi Krishan Kejriwal vide his letter dated 24.05.2008 informed to this office that both of them left the premises 8-9 years back and the premises was now owned by him.
The date of PH was again fixed on 14.07.2008 and 22.10.2008. The case was again posted for hearing on 05.11.2008. Shri P.C. Jain, Advocate appeared for the PH and submitted his written reply and reiterated the same. He further stated that the statement of Shri Sunil Kejriwal cannot be relied upon as he is not available for cross examination. Further duty has already been confirmed in respect of Kejriwal enterprises and the same can not be demanded from them.
The appellant had cross-examined R.C. Goyal of M/s. Kumar Enterprises.
Show cause notice in the present case was issued after investigations were conducted in the case of M/s. Kejriwal Enterprises and M/s. Priyanka Metals and it was noticed and observed that Sunil Kejriwal and his father K.C. Kejriwal had floated four units M/s. Geeta Metal Industries, M/s. Ajate Metal Industries, M/s. Kejriwal Enterprises and M/s. Priyanka Metals. M/s. Geeta Metal Industries and M/s. Ajate Metal Industries were fictitious units and were not engaged in manufacture. These two units were not registered with the Central Excise Department. M/s. Kejriwal Enterprises and M/s. Priyanka Metals were only receiving Modvat documents in respect of copper bars, but no copper bars were physically and actually received by them for processing or conversion into rods of 6 mm or lower thickness. The copper bars were then sold in the open market. No manufacturing activity was undertaken by these two units since July, 1991 and in 1992. Statements of Sunil Kejriwal and K.C. Kejriwal was recorded wherein they accepted the aforesaid charges. Assessments were framed against M/s. Kejriwal Enterprises and M/s. Priyanka Metals and the said allegations have been confirmed. During the course of investigation against M/s. Kejriwal Enterprises and M/s. Priyanka Metals and on scrutiny of records, it came to the knowledge of the department that the appellant had wrongly availed Modvat credit on fictitious and wrong invoices issued by the said concerns. Transporters were also interrogated and they confirmed that copper rods/bars were not transported to M/s. Kejriwal Enterprises and M/s. Priyanka Metals. The appellant had availed of Modvat credit on alleged supplies received from the said units. They could have shown and established how they approached, were introduced to the brokers/agents, goods were transported etc. Adjudication order against M/s. Kejriwal Enterprises has been confirmed by the tribunal accepting the position that they had not been manufacturing wires etc. and had fraudulently issued invoices. Once it is held and established that no manufacturing activity was indulged and undertaken by M/s. Kejriwal Enterprises and M/s. Priyanka Metals, then the alleged supplies and Modvat credit claim have to be rejected. In Commr. of Customs (Preventive) Vs. Aafloat Textiles (I) Pvt. Ltd. and Others, , it has been observed:
It was for the buyer to establish that he had no knowledge about the genuineness or otherwise of the SIL in question.
The maxim ''caveat emptor'' is clearly applicable to a case of this nature. As per Advanced Law Lexicon by P. Ramanatha Aiyar, 3rd Edn. 2005 at page 721: ''Caveat emptor'' means "Let the purchaser beware." It is one of the settled maxims, applying to a purchaser who is bound by actual as well as constructive knowledge of any defect in the thing purchased, which is obvious, or which might have been known by proper diligence.
"Caveat emptor" does not mean either in law or in Latin that the buyer must take chances. It means that the buyer must take care. ''See Wallis vs. Russell :
"Caveat emptor" is the ordinary rule in contract. A vendor is under no duty to communicate the existence even of latent defects in his wares unless by act or implication he represents such defects not to exist. (See William R. Anson, Principles of the Law of Contract 245 (Arthur L. Corbin Ed.3d. Am. ed. 1919) Applying the maxim, it was held that it is the bounden duty of the purchaser to make all such necessary enquiries and to ascertain all the facts relating to the property to be purchased prior to committing in any manner.
Caveat emptor, qui ignore are non debuit quod jus alienum emit. A maxim meaning Let a purchaser beware; who ought not to be ignorant that he is purchasing the rights of another. Hob. 99; Broom; Co., Ltd. 102 a: 3 Taunt. 439.
As the maxim applies, with certain specific restrictions, not only to the quality of, but also to the title to, land which is sold, the purchaser is generally bound to view the land and to enquire after and inspect the title-deeds; at his peril if he does not.
Upon a sale of goods the general rule with regard to their nature or quality is caveat emptor, so that in the absence of fraud, the buyer has no remedy against the seller for any defect in the goods not covered by some condition or warranty, expressed or implied. It is beyond all doubt that, by the general rules of law there is no warranty of quality arising from the bare contract of sale of goods, and that where there has been no fraud, a buyer who has not obtained an express warranty, takes all risk of defect in the goods, unless there are circumstances beyond the mere fact of sale from which a warranty may be implied. Bottomley and Another vs. Bannister and Another
No one ought in ignorance to buy that which is the right of another. The buyer according to the maxim has to be cautious, as the risk is his and not that of the seller.
Whether the buyer had made any enquiry as to the genuineness of the license within his special knowledge. He has to establish that he made enquiry and took requisite precautions to find out about the genuineness of the SIL which he was purchasing. If he has not done that consequences have to follow. These aspects do not appear to have been considered by the CESTAT in coming to the abrupt conclusion that even if one or all the respondents had knowledge that the SIL was forged or fake that was not sufficient to hold that there was no omission or commission on his part so as to render silver or gold liable for confiscation.
In view of the aforesaid factual position, which has been noticed by the tribunal and also highlighted in the order in original and in the first appellate authority, we do not think any substantial question of law arises for consideration.
The appeal is dismissed.