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Judgment
The respondent company has one of its manufacturing units at Guwahati and is engaged in manufacturing goods (paanmasala) notified under
Section 3(A) of the Central Excise Act, 1944 (hereinafter referred to as the 1944 Act). The respondent imported one packing machine No.131023840
from Japan for packing their finished products in the year 2013. In exercise of power conferred under sub-section 2 and 3 of Section (A) of the
Central Excise Act, 1944, the Central Government vide notification No.30/2008 dated 01.07.2008, notified the Paanmasala Packing Machines
(Capacity Determination and Collection of Duty) Rules, 2008 (hereinafter referred to as Rules, 2008). Rules 4 and 5 of the said Rules, 2008 prescribe
the factors relevant to production of notified goods. As per the notification No.5/2015-CE(NT) dated 01.03.2015, there was an amendment in Rule 4
of the Rules, 2008 thereby amending factors relevant for the production of the notified goods. One of the factors relevant for production of the notified
goods was amended to the maximum packing speed at which such packing machines can be operated for packing of notified goods. The said value of
production is required for assessment of the excise duty and the packing speed must be notified by the respondent as required under the Rules, 2008
by way of a declaration and the same requires to be accepted and approved by the concerned officials of the Excise Department.
The original packing speed of 1000 pouches per minute of the packing machine so imported in the year 2013 had to be reduced by installing a fresh
controlling power unit (CPU) and packing speed was reduced to a maximum speed of 750 pouches per minute. A dispute took place with respect to
fixation of the said packing speed following which the present appellant No.3 initiated an enquiry vide letter dated 18.11.2015. In the said enquiry,
summons were issued to the various officials including Associate Vice President, Senior Vice President, The Deputy General Managers of various
wings of the respondent company and to the best possible extent, the said officials of the company co-operated with the appellant No.3 in the said
enquiry.
The respondent was constrained to file WP(C) No.6065/2016 before the learned Single Judge thereby seeking for an appropriate direction for
termination of the enquiry initiated against the respondent company by way of letter dated 18.11.2015 for various grounds including causing
unnecessary harassment on the officials of the respondent company in the name of the enquiry with prolong detention in the name of the enquiry and
for recording their respective statements. The learned Single Judge vide judgment and order dated 22.06.2017 quashed the said enquiry initiated vide
letter dated 18.11.2015 and being aggrieved, the present appellants have preferred this appeal challenging the said judgment and order of the learned
Single Judge.
Mr. Sarma, learned standing counsel for the Central Excise Department submits that enquiry is conducted under Section 11 (A) of the 1944 Act
which clearly stipulates that where any duty of excise has not been levied by the reason fraud, collusion etc. by any person chargeable with the duty,
the Central Excise Officer is empowered within a period of 5 years from the relevant date to serve notice on such person requiring him to show cause
why he should not pay the amount specified in the notice along with various penalties. The enquiry which was initiated in the month of November,
2015 got delayed as one of the directors and the key managerial person Mr. Chander Kant Sarma defaulted in appearing before the enquiry officer,
though summons dated 18.07.2016 was issued. The statement of said Mr. Sarma is vital in order to conclude the enquiry as the Senior Vice President
of the respondent company Mr. Chiranjib Roy Choudhury who is the Head of the Technical Department, admitted that certain misinformations were
supplied to the Technical Department regarding procurement of the CPU. The said decision to change the CPU and the entire process of changing
the CPU was done by a team under consultation of the business head of the company, Mr. Chander Kant Sarma. It is further submitted that the
questioning of the said director, Mr. Sarma is of utmost necessary as the said Chiranjib Roy Choudhury, the Senior Vice President, Technical
Department admitted that misinformations were supplied regarding procurement of the CPU. As such Mr. Sarma submits that interference is required
in the judgment and order passed by the learned Single Judge.
Mr. Saraf, the learned senior counsel on the other had submits that the learned Single Judge had realized the extent of harassment caused to the
officials of the respondent company and by a reasoned order, the learned Single Judge has passed the judgment. The appellant has its power to carry
out the enquiry but without harassing to the officials of the respondent company. It is further submitted that the basis of the enquiry is totally
unacceptable. The packing machine so imported has its maximum packing speed of 1000 pouches per minute and the respondent company has its
liberty to operate at speed below than the maximum mark. Accordingly, he submits that the order passed by the learned Single Judge is proper and
needs no interference by this Court.
We have given our anxious thoughts. It is the contention of Mr. Sarma that one Mr. Chiranjib Roy Choudhury admitted that misinformations were
supplied to the Department regarding procurement of the CPU and the entire process of changing of CPU was done by a team under the business
head of the Company, Mr. Chander Kant Sarma. If that be so the following corollary is that Mr. Chander Kant Sarma’s statement is relevant in
coming to the conclusion of the enquiry. On the other hand, in the name of the enquiry, the appellant has no authority to cause harassment to the said
officials of the respondent company thereby depriving the respondent company from carrying out its business and summoning the responsible officers
and detaining them without any reason causing fear psychosis on the said officials which would cause irreparable loss to the petitioner/respondent
company.
In order to verify the submission of Mr. Sarma, the learned standing counsel for the appellant, we asked him to produce the statement of Mr.
Chiranjib Roy Choudhury, senior Vice President (Technical Service) of the respondent company and in compliance to our direction, Mr. Sarma, by
way of an affidavit produced the statement of the said Mr. Roy Choudhury. We have gone through the statement recorded by the investigating officer
of the Department. We are surprised that no such statement as stated by Mr. Sarma or informed to him by Mr. Rathindra Kr. Sarkar, the Assistant
Commissioner with regard to misinformation by Mr. Chander Kant Sarma are recorded. The said Mr. Sarkar who was present in the Court was
asked to verify the veracity of information fed to this Court through the Standing Counsel and in fact he informed this court through the learned
counsel that the said information was fed to him by the investigating officer which he forwarded to the Standing Counsel. On perusal of the said
information given to the learned counsel Mr. Sarma, it is seen that the name of Mr. R. K. Sarkar, the Assistant Commissioner is very much reflected
in the said instruction to the learned counsel and such act of misinformation to the court amounts to fraud played upon this Court.
Behind such a backdrop we are of the considered opinion that enquiry so conducted was rightly quashed by the learned Single Judge inasmuch as
the statement of Mr. Roy Choudhury so recorded does not mention about any misinformation as submitted by Mr. Sarma. While expressing our minds
to the learned counsel Mr. Sarma for the appellant, he on his part, prayed to allow the enquiry to be concluded under Section 11 (A) of the 1944 Act
without recording the statement of Mr. Chander Kant Sarma, the Director of the respondent company and key managerial person after modifying the
judgment and order of the learned Single Judge. To his prayer, the learned senior counsel for the respondent has not only fairly agreed but also stated
that the respondent company will not challenge the enquiry report on the ground of non-examination of Mr. Chander Kant Sarma.
In view of the aforesaid we finally dispose of the writ appeal by allowing the Department to conclude the enquiry without recording the statement
of Mr. Chander Kant Sarma. As agreed, the respondent will not challenge the findings (adverse, if any) of the enquiry report on the ground that Mr.
Chander Kant Sarma was not given an opportunity in the enquiry.
The impugned order dated 22.06.2017 passed by the learned Single Judge stands modified to the above extent.