2002 PLP 2967 (PTD)

SARFRAZ AHMAD KHAN (MEMBER TECHNICAL). ‑‑‑Brief facts of the case are that the Central Excise Staff visited the appellants' unit (manufacturer of toilet soap) on 26‑10‑1992 and found the unit in operation while a notice for its closure had been given to the Central Excise Department. 662 cartons (each containing 72 cakes) of Safina brand toilet soap (230 cartons), Nimbil brand toilet soap 313 (164 cartons), Safina Carbolic (in packing and wrapping process 152 cartons and Nimbil toilet soap (116 cartons) in packing and wrapping process) valuing Rs.1,90,656 involving central excise duty amount to Rs.22,787.72 were seized on account of having not been recorded in the prescribed central excise records. The Central Excise. Team also recovered private records in the form of 11 registers and books etc., which were seized alongwith the prescribed central excise record like RG‑1 register and daily production record/book etc. A scrutiny of the private records led the Central Excise Officers to believe that during the last five years between November, 1987 to August, 1992 the appellants had cleared 1,02,.667 cartons of various qualities and brands of toilet soap valuing Rs.29,568,096 without payment of Central Excise Duty amounting to Rs.53,66,

880. A seizure report was submitted by the Deputy Superintendent Central Excise on 19‑12‑1992. Based thereon the then Collector Central Excise, Lahore served a show‑cause notice dated 21‑12‑1992 to the appellants proposing to recover the aforemen tioned amounts of central excise duty in addition to penal action against them under the legal provisions of Central Excise Rules, 1994 mentioned therein. The appellants filed Writ Petition No.2817 of 1995 in the Hon'ble High Court making certain allegations against the central excise officers and vide its judgment dated 25‑6‑1998 they were asked to submit reply to the notice and the concerned authorities were directed to decide the case within two months. The Collector Central Excise, Lahore vide his order in original C. No .IV‑T.S. Soap(8)/Collr/S/706/92/4063, dated 30‑11‑1998 decided the case as under:‑‑ (i) Seized 662 cartons of toilet soap were confiscated but the appellants were allowed to redeem the same on payment of a fine of Rs.22,878.72 in lieu of confiscation and in addition to payment of Rs.22,878.72 as central excise duty. (ii) The appellants were ordered to pay Rs.53,36,301 as central excise duty involved on 102667 cartons of toilet soap cleared without payment of central excise duty during last five years as confirmed from the private records. (iii) A penalty of Rs.53,59,179 was imposed on the appellants under rules 210 arid 226 of the Central Excise Rules, 1944 for violation of the Central Excise Rules mentioned in the show- cause notice.

2. The Appeal No.15/LB of 1999 filed before the Tribunal was also dismissed vide its judgment issued on 13‑12‑1999. The appellants filed Appeal No.6 of 2000 before the Hon'ble High Court and the learned Division Bench vide its judgment dated 18‑9‑2001 remanded the matter to the Tribunal "for their consideration afresh on the grounds both factual as well as legal raised before them or to be raised" by them now. The fresh proceedings have been started by us in compliance of the aforementioned judgment of the Hon'ble High Court.

3. The learned counsel initially urged the following points during hearing held on 6‑3‑2002:‑‑ (i) The amount of Rs.2,278.72 as central excise duty involved on the seized confiscated 662 cartons of toilet soap valuing Rs.1,90,656 is accepted.' (ii) The private records seized from the appellants' unit on 26‑10‑1992 belonged to Al‑Hijaz Marketing Corporation, Khudad Street, Shalimar Lahore and its owner (Mr. Jameel) admitted it before the Adjudicating Officer. Hence, no liability could be adjudged against the appellant without proving that the private record belonged to the appellants. (iii) The soap contained in 102667 cartons valuing Rs.2,95,68,096 against which an amount of Rs.53,36,301 as central excise duty had been adjudged against the appellants was laundry soap and not toilet soap. Laundry soap was exempt from central excise duty. We are prepared to produce samples so that the learned Tribunal may adjudge itself whether it was laundry soap or toilet soap. If the learned Tribunal is satisfied that it was laundry soap, then there would be no justification for demanding central excise duty from the appellants and for imposition of penalty as done by the Adjudicating Officer. (iv) The case was made out with mala fide intention for extorting money. (v) During discussion the learned counsel stated that he would not press the question of ownership of the private record and the learned Tribunal may decide the case in this respect only on the basis of examination of the relevant samples of soap.

4. The learned D.R. agreed to this proposition of the learned counsel and hence the case was adjourned to 12‑3‑2002 samples of the following brand were produced before us:‑‑ (i) Sun Rise.‑‑‑6 cakes of soap were packed in one polyethylene bag and there was one printed sticker inside bearing the name of "Sun Rise Laundry Soap, 313" alongwith the name of the manufacturing factory i.e. Al‑Shams Soap and Chemical Industry. (ii) Safina Soap.‑‑‑4 cakes packed in a polyethylene packing, each cake weighing 250 grams. (iii) Safina Super Red.‑‑‑It was without any wrapping/packing. Each cake weighed 300‑350 grams. (A representative of the manufacturer accompanying the learned counsel verbally stated that 40 cakes used to be packed in one carton for sale in the market). (iv) Deluxe 313.‑‑‑(D x 313) it was without any wrapping/packing. Each cake was of 240 grams. (v) Badar Special 313m.‑‑‑4 cakes were packed in polyethylene packing, each cake weighed 250 grams. (vi) Safina Special.‑‑‑4 cakes packed in polyethylene packing each cake weighing 250 grams. (vii) Badar 1st Category.‑‑‑4 cakes packed in polyethylene‑ packing each cake weighing 250 grams. (viii) Nirol.‑‑‑It was without any wrapping/packing. It was in two sizes‑‑200 grams each cake and 400 grams each cake. (ix) Transparent. ‑‑‑No sample was produced but in its place a sample of Transparent laundry soap manufactured by Sufi Soap Industry was produced. Representative of the manufacturer appearing alongwith the learned counsel stated that when in red colour it used to be marked as Safina Super Red and without red colour it used to be called transparent. Otherwise, it had the same particulars as those of Safina Super Red. He further clarified that no transparent toilet soap has ever been manufactured in Pakistan.

5. The particulars of the samples were compared with a list duly signed by the Deputy Superintendent, Central Excise, which had been prepared as a result of the scrutiny of the private record. The learned D.R. pointed out that samples of Biggle Brand had not been produced but the learned counsel pointed out that same was not included in the list bearing the signature of the Deputy Superintendent Central Excise on the basis of which the liability of Rs.5,336,301 had been adjudged against the appellants on 102667 cartons. He also stated that if the said Biggle Brand could be proved to be included in the said 102667 cartons, the appellants would pay the central excise duty involved therein.

6. The learned D.R. 'and the Inspector, Central Excise accompanying him were asked to confirm that these representative samples were of the same brands which were covered in the private record and they replied in the affirmative. The learned D.R. and the Inspector Central Excise were further asked to prove that these samples were of toilet soap and not of laundry soap. He stated that except for the Sun Rise brand all the reprehensive samples were of laundry soap and those could not be proved to be of toilet Soap. At this stage the learned counsel produced samples of Sun Light Soap manufactured by Lever Brothers: These cakes (6 pieces per pack) were packed in polyethylene packing and he stated that Sun Light was being allowed as laundry soap by the central excise department and in case the department could prove that central excise duty was being collected on Sun Light Soap manufactured by Lever Brothers, the appellants would also pay central excise duty on their Sun Rise brand. The learned D.R. contended that the appellants should prove their own case without giving any reference to the Sun Light Soap of Lever Brothers.

7. We have heard both the sides at length and also seen the representative samples and perused the case record. There is no controversy regarding the representative samples produced before us (except for Sun Rise brand) being the laundry soap. Even the samples of Sun Rise soap brand looked to be inferior as compared to the Sun Light brand soap of Lever Brothers, which is already being accepted as a laundry soap when marketed unwrapped in polyethylene packing of a number of cakes in each pack. After thorough examination of the samples we are convinced that all these brands conform to the appearance/particulars of a laundry soap available in the market. None of the samples were individually wrapped. Sun Rise, Safina Soap, Badar Special, (Sun Rise had 6 cakes in one pack while others had 4 cakes/pack). Remaining brands were without any wrapping but cakes were in bigger size. From their shape and smell and all other particulars visible to naked eye, all these samples were of laundry soap and not at toilet soap. Hence these were exempt from central excise duty. That. being so, the amount of Rs.53,36,301 adjudged as central excise duty on 102667 cartons of soap by the Adjudicating Officer is ordered not to be payable by the appellants. Resultantly, there is no justification for such a heavy penalty of Rs.53,59,179 on the appellants and the same is' reduced to RS.5,000 only since unaccounted for 662 cartons of toilet soap were found available by the central excise staff in the appellants, factory on 26‑10‑1992 as admitted by the learned counsel for the appellant. The appellant shall pay Rs.22,878.72 as central excise duty involved on 662 cartons of toilet soap valuing Rs.1,90,

656. However, the fine in lieu of confiscation is reduced from Rs.22,878.22 to Rs.5,000 only since the soap in question is lying for the last more than nine years.

8. The appeal is accepted to the above extent and the impugned order stands modified accordingly.

9. Before parting with the judgment, we consider it necessary to place on record that the issue would have got resolved long time ago if those dealing with the case during investigation and then adjudication had bothered to look at the samples of the brands which figured in the private records. The appellants have been contending since the time of detection during October, 1992 that the brands shown in the private records were of laundry soap and not of toilet soap. Although the issue would have got resolved just by visual examination and, may be, for further satisfaction through market inquiry. If somebody still had doubts, laboratory tests could have given the specifications to determine the category of soap. This mishandling of the case caused the appellants to suffer for more than eight years and there were wild allegations of extortion of money against Central Excise Officers. The factory has got closed down and incidence is buried in big files as well as in the minds and hears of the living people who dealt with the case in any capacity. All of this was avoidable. C.A.M./M.A,K./306/Tax(Trib.) Order accordingly.