Custom, Excise & Service Tax Tribunal
The Commissioner Of Customs & Central ... vs M/S. Vijay Packaging Systems Ltd on 8 September, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Appeal No:E/966/2006 (Arising out of Order-in-Original No. 19/2005 dated 29.08.2005 passed by the Commissioner of Customs & Central Excise, Hyderabad-III Commissionerate 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3. Whether their Lordship wish to see the fair copy of the Order? No 4. Whether Order is to be circulated to the Departmental authorities? No The Commissioner of Customs & Central Excise Hyderabad-III Commissionerate Appellant Vs. M/s. Vijay Packaging Systems Ltd. Respondent
Appearance Shri M.M. Ravi Rajendran, JDR, for the Revenue appellant Shri V.J. Sankaram, Advocate, for the Respondent CORAM MR. M.V. RAVINDRAN, HONBLE MEMBER (JUDICIAL) MR. P. KARTHIKEYAN, HONBLE MEMBER (TECHNICAL) Date of Hearing: 28.04.2010 Date of decision: 08.09.2010 FINAL ORDER No._____________2010 Per P. Karthikeyan This is an appeal filed by the Revenue. In the remand proceedings, the Commissioner passed impugned order No. 19/2005-Commr. dated 29.08.2005. Revenue has filed Appeal No. E/966/2006. The impugned order disposed six Show Cause Notices issued to M/s. Vijay Packaging Systems Ltd. (VPSL) engaged in the manufacture of HDPE/LDPE Tapes and Fabrics from HDPE granules. The Show Cause Notices cover the period 1989 to 1996.
1.1 In brief, facts are that VPSL was alleged to have manufactured and cleared excisable goods by availing inadmissible SSI exemption. It had set up eight other units for the said purpose. On 12.02.1992, when the Officers of the Department visited the premises of VPSL, they found stocks of HDPE fabrics, tapes and sacks at the premises but the respondents could not produce the statutory RG-I Register. When the RG-I register was produced, there was a shortage of 20,000 laminated sacks found at the premises. Scrutiny of records maintained by VPSL showed that it had received a quantity of 1,83,267 kgs. of PVC granules without accounting in the statutory Form IV register during the period 10/89 to 1/92. It had manufactured HDPE fabrics and cleared the same without paying the duty due of Rs. 9,46,821/- during the period March, 1990 to January, 1992. During 10/89 to 03/90, VPSL had manufactured and captively consumed HDPE tapes involving duty of Rs. 4,50,231/- without paying duty due. The Audited Balance Sheet of VPSL for the year 89-90 showed that it manufactured HDPE sacks during 88-89 and 89-90. The duty involved on these HDPE sacks worked out to Rs. 8,28,261/- and Rs. 4,60,218/- respectively. Production of these quantities of HDPE sacks had not been recorded in the statutory RG-I account. It was tentatively found that VPSL had set up eight units for manufacture of HDPE sacks in order that clearances of these finished products remained within the exemption extended to SSI units. VPSL evaded duty of Rs. 30,59,090/- on HDPE tape, fabrics and sacks cleared by it and duty amounting to Rs. 79,92,124/- on the HDPE sacks manufactured and cleared in the name of eight other units set up to avail undue SSI exemption. It was also proposed to confiscate 5280 Kgs. of HDPE unlaminated fabrics, 2016 Kgs. of HDPE laminated fabric, 750 Kgs. of HDPE tape and 2000 numbers of HDPE sacks of value Rs. 4,30,130/- which was seized on 12.02.1992 and to penalize VPSL.Statements were recorded from the Managing Director, VPSL, its Plant Manager and persons in-charge of the eight small units engaged in the production and sale of HDPE sacks to VPSL.Show Cause notice No.19/92 was issued to VPSL seeking to demand duty tentatively found due from VPSL 1.3 Notices were issued also to the Executives of VPSL and persons in-charge of the eight SSI Units to show cause why the clearances made by all the units should not be held to have been on account of VPSL and to penalize them.
1.4 Four more Show Cause Notices, No. 195/94 and 197/94 dated 30.12.1994; 86/95 dated 19.01.1995; 470/95 dated 26.10.1995; 165/95 dated 25.04.1996 and 279/96 dated 24.09.1996 were issued. Order No. C.EX. 46/97 dated 15.07.1997 was passed adjudicating Show Cause Notice No. 19/92. The Commissioner confirmed the proposals in the Show Cause Notice and demanded duty on the HDPE sacks by clubbing clearances of VPSL and other eight units. Vide OIO No. 47/97 dated 15.07.1997, an amount of Rs. 46,45,920/- was demanded along with applicable interest. 1130 Kgs. of HDPE waste, 15759 Kgs. of HDPE granules, 105500 Polysacks were held liable for confiscation. As the goods had been released provisionally, the Commissioner ordered redemption fine of Rs. 1,50,000/-. He imposed penalty of Rs. 25,00,000/- on VPSL and Rs. 5,00,000/- each on three of the eight other units found to have been involved in the manufacture of Polysacks. He imposed penalty of Rs. 5,00,000/- each on M/s. Vijetha Sacks; M/s. Vijaya Sacks and M/s. Vijaya Fabrics.He imposed penalty of Rs. 10,00,000/- on Shri M. Laxmikar Reddy, MD of VPSL and penalty of Rs. 2,00,000/- each on the Executives of M/s. Vijetha Sacks; M/s. Vijaya Sacks and M/s. Vijaya Fabrics. He also confiscated the land, building, plant and machinery of VPSL and ordered a fine of Rs. 5,00,000/- to redeem them.
1.5. The remaining Show Cause Notices were similarly disposed by demanding differential duty from VPSL towards clearances made during the respective period covered by each of the Show Cause Notices. These were order Nos.48/97, 49/97, 50/97 and 51/97 all dated 15.07.1997. In order Nos. 48 and 49, the demand is made on VPSL and 3 other units jointly. In Order Nos. 50 and 51/97 also, demand is made jointly with other units/unit held to have been set up to avail undue SSI exemption.
1.6 Disposing the appeals filed by M/s. Vijay Packaging Systems Ltd., M/s. Vijetha Sacks, M/s. Vijay sacks & Others vide Final Order No. 930 to 950/2003 dated 17.07.2003, the Tribunal ordered as follows:-
The Counsel submits that the issue relates to clubbing of clearance. He said that as can be seen from the respective orders, M/s. Vijay Packaging Systems Ltd. is the main party and others are dummies. He said that since the Department has treated the other units as dummies, there was no necessity to demand duty. Nevertheless the duty was demanded from them. He said that the issue involved herein has been squarely covered by decision of the Supreme Court in the case of Gajanan Fabrics Distributors, Sangli & Others Vs. Collector of Central Excise, Pune reported in (1997) 11 Supreme Court Cases 66. In support of his contention, he drew our attention to the relevant portion of the said order which reads as under Having regard to his conclusion that all units other than Gajanan Weaving Mills were fictitious units, the sequitur one would have assumed could only be that it was Gajanan Weaving Mills which was the assessee and liable to satisfy the demand. By confirming the demand upon all the seven units the Collector appears, however, to have treated them all as assessees and, implicitly recognized their independent existence.
Heard Shri L. Narasimha Murthy, JDR for Revenue who submitted that in the appeal No. E/2377/97, the duty was demanded only from the main party.
On a careful consideration of the submissions made by both sides and on perusal of records, we find that the issue involved herein has been squarely covered by aforesaid decision of the Apex Court, as pointed out by the Sr. Counsel. Following the aforesaid decision, we remand the matter to the concerned adjudicating authority to examine the issue afresh and to pass an appropriate order in accordance with law on providing an opportunity to the party. All the issues are kept open. Thus, all these appeals are disposed off in the above terms.
2. Adjudicating the six Show Cause Notices in the remand proceedings, the Commissioner passed order No. 19/2005-Commr. dated 29.08.2005. Revenue has filed appeal No. E/966/2006. The impugned order is discussed below.
I. The Commissioner took up the proposals contained in Show Cause Notice No. 19/92 dated 7.8.1992 as discussed below.
(a) It was proposed to confiscate 5280 Kgs. of HDPE unlaminated fabrics; 2016 Kgs. of HDPE laminated fabrics; 750 Kgs. of HDPE tapes and 2000 numbers of sacks all valued at Rs. 4,30,130/- seized by the officers on 12.02.1992. The Commissioner found the physical stock of various goods to be below the respective accounted stock and held that the seized goods were not liable for confiscation since no intention to evade payment of duty by the assessee was established. As regards the shortage of 20,000 sacks found on the date of visit of the officers, the Commissioner accepted the explanation of VPSL that the same had been lying in the godown at the time of officers visit. In the absence of conclusive proof regarding the shortage or clandestine clearance, the Commissioner granted benefit of doubt to the assessee and dropped the proposal to demand duty on 20,000 sacks found short.
(b) As regards the duty liability of Rs. 2,97,000/- towards alleged manufacture and clearance of 20,000 kgs. of HDPE fabric without cover of Central Excise gate pass and without payment of duty, the Commissioner found that the allegation had been made based on the details furnished by the Managing Director of VPSL in a statement dated 03.07.1992. These details had not been detected by the investigation. The respondents had paid the duty due of Rs. 2,97,000/-. Accordingly, the Commissioner accepted the plea of the respondents that the omission had arisen due to the absence of the concerned clerk and not due to any malafide intention of the assessee.
(c) The next allegation was that VPSL received a quantity of 1,83,267 kgs. of granules in excess of the stock accounted in their Form-IV register and utilized the same for clandestine manufacture and clearance of tapes and fabrics; that during the period from 4.10.89 to 20.3.90, VPSL manufactured and cleared 1,01,403.300 kgs. of tapes without accounting, without cover of gate pass and without payment of duty amounting to Rs. 4,50,231/-; that during the period from 22.3.90 to 31.1.92, VPSL manufactured and cleared 87,189.800 kgs. of fabric without accounting, without cover of gate pass and without payment of duty amounting to Rs. 9,46,821/-.
The Commissioner observed that the allegation had basis in the production reports maintained by the personnel of VPSL. Not a piece of evidence existed on record to prove clandestine manufacture and clearance of the subject goods by VPSL. He dropped the proceedings.
(d) The next allegation is that VPSL had cleared 12,86,400 and 9,94,085 pieces of HDPE sacks during 1988-89 and 1989-90 involving duty of Rs. 8,28,261/- and Rs. 4,60,218/- respectively, based on the production figures and the audited Balance Sheet of VPSL for the year 1989-90. The RG-I for the relevant period did not show the production reflected in the Audited Balance Sheet for the year 1989-90. The assessee had explained the entries in the Balance Sheet as due to mistake. The Commissioner found that clandestine manufacture and clearance could not be found without any conclusive proof. He dropped the demands relying on various case-laws.
(e) The major allegation in the notice was that VPSL manufactured and cleared 78,43,624 nos. of sacks valued at Rs. 5,25,81,507/- in the name of eight shadow units created by them during the period from April, 1988 to January 1992 and evaded duty to the tune of Rs. 79,92,124/- by wrongly availing the benefit of exemption notification No. 175/86-CE and 1/93-CE, as amended. After hearing the parties, the Commissioner observed that the commercial relation which existed between VPSL and the eight units was that VPSL was selling fabric to these units against invoices and purchasing stitched sacks from these units under invoices/Central Excise gate passes. The independent status of all the eight units was established from their registration with the department, filing RT 12s and registration with the Sales Tax department. The small units also sold sacks to some other buyers. The Commissioner found that in order to club the value of clearances of different units, it was essential to prove mutuality of interest and financial flow back from one firm to the other. The department had failed to establish that the eight small units were dummies of VPSL and dropped the allegation and demand.
(f) Another issue decided by the Commissioner was the claim of the assessee that HDPE/PP sacks were exempt from payment of excise duty. He relied on Final Order Nos. 259-262/2005 of the CESTAT, Bangalore in the case of M/s. RG Plastics and Packaging P. Ltd. & Others Vs. CCE, Hyderabad in support of the plea that Sl. No. 39 of Notification No. 53/88-CE exempted all goods other than of Polyurethane falling under Chapter Heading No. 39.23, 39.24 and 39.26 made out of goods falling under Heading Nos. 39.01 to 39.15 of the Central Excise Tariff on which the duty of excise leviable thereon under the Central Excise Act, 1944 or the additional duty under Section 3 of Customs Tariff Act, 1975, had already been paid. The Commissioner found that HDPE sacks fell under Chapter Heading 39.23. HDPE granules fell under Chapter Heading 39.01 from which HDPE sacks were manufactured. The Commissioner noted that the duty paid nature of HDPE granules was not disputed. The receipt and issue of granules were properly reflected in the Form-IV register of VPSL. In view of this position, the HDPE/LDPE granules used in the sacks manufactured by the eight units had to be held as exempt under Notification No. 53/88-CE even if they were manufactured and accounted by VPSL.
II. Show Cause Notice 195/94 and 197/94 dated 30.12.1994 dealt with the allegation of clandestine manufacture and clearance of goods involving duty liability on VPSL,M/s. Vijetha Sacks, M/s. Vijaya Sacks and M/s. Vijaya Fabrics on account of under valuation and inadmissible SSI benefit availed. The notice also decided liability to confiscation of goods seized in the premises of VPSL and M/s. Vijetha Sacks. The relevant orders are discussed below.
(a) Liability to confiscation of 1138 kgs. of HDPE waste and 15,759 kgs of LDPE granules seized at the premises of VPSL. These goods were seized for the reason that they were found in excess over the accounted balance. Before the Commissioner, the assessee established that as per the test report, L.Cs. 39/S/96-97/764/CX.No.145 and 145A dated 24.02.1997 of the Chemical Examiner, Customs House, Chennai, the granules seized were of HDPE. Thus, there was no excess stock of LDPE granules. The 1138 kgs of HDPE waste were entered in the statutory records of the assessee after its provisional release. The department had failed to prove that the unaccounted stocks of the goods seized were liable for confiscation.
(b) The notice proposed confiscation of 1,05,500 pieces of poly sacks seized at the premises of M/s. Vijetha Sacks. These goods were seized on the ground that they were found in excess over the book balances on the day of visit by the officers. The Commissioner found that there was no evidence to prove that the unaccounted stocks were in fact kept with an intention to evade payment of duty and he held them not liable for confiscation.
(c) The duty demand of Rs. 9,43,759/- was on alleged clearances of 6260.22 kgs of HDPE laminated fabric, 3658 kgs of laminated fabric and 7048 kgs of HDPE tape without payment of duty and also on unaccounted production of 42,820 kgs of HDPE fabric manufactured from 53,525 kgs of HDPE granules and 7,875 kgs of polythene master batch granules. This demand was based on the surmise that the goods found short were utilized in the manufacture and clearance of HDPE fabric. Shortage of stocks was found on physical verification on the day of visit i.e. 01.07.1994 at VPSL. In this regard, the Commissioner entered the following findings:
The Department alleged a shortage of stock of HDPE granules of 53,525 kgs. But, it had been conclusively established that the 15,759 kgs of granules seized as excess stock as LDPE granules were in fact HDPE granules (the test report of Chemical Examiner, Customs House, Chennai shows the said granules as HDPE). Moreover, as submitted by the assessee, when new Form IV was opened, the Department certified the balance as brought forward as 60,200 kgs. i.e, the book balance existed on the date of verification and the same balance was carried forward with receipts and issue of granules. At a subsequent date i.e. on 18.11.94, the stock existed on that day was certified as correct by the Department itself. If there was a shortage of 53,525 kgs. on 1.7.94, how the stock on 18.11.94 could be correct, which included this shortage. There was force in the argument put forth by the assessees in this regard.
In spite of the above, even if it was assumed that the alleged shortage of HDPE granules was correct, no duty could be demanded on granules, unless it was proved that they were non duty paid. In a situation where the said granules were duty paid and the assessee had taken credit of the duty so paid, then the credit so taken could be denied. There seemed to be no investigation caused in this angle. It was beyond reasoning how demand could be made alleging clandestine clearance of fabric for alleged shortage of granules. There was nothing on record as to whether the granules were removed as such or utilized by VPSL in the manufacture of tape, whether such tape again was utilized in the manufacture of fabric and how and when such fabric was removed clandestinely by VPSL. All these were unanswered and, in the absence of any such evidence, it could not be concluded that fabric had been manufactured out of this stock and the said fabric was removed without accountal and without payment of duty.
There was no proof whether any granules were used in the unaccounted production of fabric; no evidence of alleged manufacture of fabric; no evidence of removal/transportation of such fabric; no evidence as to who were the buyers and how the sale proceeds were realized or accounted by VPSL. The burden of proof rested on the Department. The department had failed to discharge this burden. Therefore, the charge of clandestine manufacture and clearance of 43,250 kgs of fabrics failed. Similarly, there was no evidence for manufacture and clearance of fabric from 7,875 kgs of polythene master batch granules.
(d) As regards the allegation of clearance of 6260.22 kgs of HDPE laminated fabric, 3658.00 kgs of laminated fabric, 7,048 kgs of HDPE tape without payment of duty, the Commissioner held that VPSL was liable to pay duty of a total of Rs. 1,82,820/-.
III. Show Cause Notices 86/95 dated 19.01.1995; 470/95 dated 26.10.95; 165/96 dated 25.04.1996; 279/96 dated 24.09.1996 proposed to demand duty as follows:-
SCN No. & Date Period Differential Duty (Rs.) Demanded from 86/95 dt.
19.1.1995 7/94 11/94 7/94 11/94 7/94 11/94 1,29,985/-
6,23,171/-
4,42,700/- Vijetha Sacks & VPSL Vijaya Fabrics & VPSL Vijaya Sacks & VPSL 470/95 dt.
26.10.1995 4/95 9/95 4/95 9/95 4/95 9/95 1,75,932/-
6,23,836/-
5,71,613/- Vijetha Sacks & VPSL Vijaya Fabrics & VPSL Vijaya Sacks & VPSL 165/96 dt.
25.4.1996 10/95 11/95 53,387/- Vijaya Sacks & VPSL 279/96 dt. 24.09.1996 4/96 8/96 6,21,947/- Vijaya Sacks & VPSL
(a) The proposal is on the basis that the plastic sacks manufactured and cleared by M/s. Vijetha Sacks, M/s. Vijaya Fabrics and M/s. Vijaya Sacks were actually manufacture of VPSL. These sacks had been sold at much higher price by VPSL. These clearances were not entitled to SSI exemption and these had to discharge duty applicable to prices at which these were sold by VPSL. The Commissioner found that the Department failed to prove conclusively with sufficient evidence that M/s. Vijetha Sacks, M/s. Vijaya Fabrics and M/s. Vijaya Sacks were dummies and existed only on paper. The Commissioner held that these units were independent entities and their clearances could not be treated as clearances by VPSL and clubbed together with those clearances of VPSL to arrive at any duty liability. The impugned clearances were entitled to benefit of Notification No. 175/86 and later under Notification No. 1/93-CE.
(b) He also held that as regards the demands relatable to Show Cause Notice No. 195/94 and 197/94 dated 30.12.1994, the same were barred by limitation as demand had been raised on the same grounds as in the Show Cause Notice No. 19/92 invoking larger period.
(c) Accordingly, the Commissioner demanded from VPSL an amount of Rs. 1,82,820/- as proposed in Show Cause Notice No. 195/94 and 197/94 dated 30.12.1994 along with applicable interest from VPSL. He also imposed a penalty of Rs. 20,000/- on VPSL under Rules 9(2), 52A, 173Q and 226 of the Central Excise Rules, 1944. He dropped the proceedings proposed in the other Show Cause Notices as well as the other proposals in Show Cause Notice No. 195/94 and 197/94 dated 30.12.1994.
3. In the appeal filed by the Revenue, the impugned order is assailed in so far as it relates to the following parts:-
(A) Demand of duty due on 20,000 sacks found short on the date of visit of the officers on 12.02.1992.
It is submitted that on the date of visit of the officers to the premises of VPSL on 12.02.1992, they noticed shortage of a quantity of 2000 HDPE sacks. The Commissioner had wrongly found that the officers failed to verify the physical stock after receiving the RG-I on the same day from the office of the assessee. They had not tried to reconcile the stock and, therefore, the proposal for confiscation was not proper. The Commissioner wrongly accepted the assessees explanation that the 20,000 bags found short were lying in their godown. Such an explanation which came after a lapse of four years (of detection) was an after thought. While holding the assessees contention as not convincing, the Commissioner chose to extend the benefit of doubt to the assessee on the ground that there was no evidence on record for the clandestine clearance of 20000 sacks. The assessee had not offered any valid explanation for the discrepancy in order to show that the said goods had been cleared on payment of appropriate duty on particular dates. The onus was on the assessee to prove that the goods had not been cleared clandestinely and hence, extending of benefit of doubt by the Commissioner was not warranted and was improper.
We have considered the submissions by both sides on the finding of the Commissioner. We find considerable merit in the submission of the Revenue reproduced above. Though shortage of 20000 HDPE sacks were noticed on 12.02.1992, the explanation of the assessee that these goods had been lying in their godown at the time of the visit of the officers and, therefore, shortage could not be explained is undoubtedly an unacceptable explanation. We find that if the defence advanced is true to fact, the assessee should not have waited for four years to lapse when they received a Show Cause Notice proposing action under the provisions for the shortage found. We find that the Commissioner wrongly allowed benefit of doubt to the assessee. We find that the impugned goods had been cleared clandestinely and the respondents are bound to suffer the legal consequences. We remand the liability of VPSL to penalty to the Commissioner to decide afresh after hearing the parties.
(B) As regards non-accountal of a quantity of 1,83,267 kgs. of granules received by the assessee and consequent production and clearances of tapes, fabrics and sacks as shown in the production records prepared by the Production manager, the Revenue assails the Commissioners decision to drop the demand in the following manner.
As for the production reports of VPSL for the period 10/89 to 7/90 and 2/91 to 1/92, seized from its Registered Office, the only explanation of the respondents was that the same did not reflect the correct picture. Those had been maintained only to show lower percentage of wastage to the officers. VPSL accepted that the normal wastage in the similar line of activity was around 20 to 25% whereas the production report showed wastage of 1 to 5%. The retraction of the scribe of the production reports by Shri K. Mohan Rao, Production Manager, in an Affidavit was an after thought. When the respondents claimed the wastage to be 20 to 25%, the claim of the Production Manager that the production reports were procured to show less wastage did not stand the test of reality. The claims of the assessee and the Production Manager were contradictory. Moreover, Shri Laxmikar Reddy, MD of VPSL in his statement dated 3.7.1992 had stated that no copies of the production reports were received by him. According to Shri Mohan Rao, these production reports had been prepared for the perusal by the MD. Therefore, the Commissioners finding that the Revenue had sought to establish the charge of clandestine removal on the basis of private records whose authenticity was doubted by the noticees did not appear correct. The production reports had been prepared by the Production Manager of the assessee and were seized from their office premises. The respondents had not offered any valid explanation for the impugned reports.
We have carefully considered the submissions by both sides defending and challenging the relevant finding of the Commissioner. We find that the Commissioner had dropped the proposal to demand duty on the unaccounted production and clearance based on the impugned production reports, finding that these were incomplete in details. Before the Tribunal, the respondents had furnished a list showing issue of raw material and quantity of goods produced. As per this list, on all the days covered, the total quantity of finished goods was in excess of the quantity of raw material (by weight) issued. We note that the Commissioner does not discuss this plea of the respondents. The respondents had also furnished affidavits of manufacturers of similar goods as the assessee to show that wastage suffered in the process of manufacture in the line of activity engaged in by the assessee was around 20 to 25%. The impugned reports had shown waste of 1 to 5%. There is no evidence of unaccounted purchase of raw materials. The Department has not shown any evidence regarding the buyers of the so called unaccounted goods. We are in agreement with the Commissioner that clandestine clearance cannot be found without evidence.We reject this part of the appeal.
(C) The Balance Sheet of the assessee for the year 1989-90 had shown unaccounted production. The assessees explanation was that this was a mistake. It was worth noting that the mistake occurred in two consecutive years. The assessees contention that the said goods were not produced in their factory but had been procured from outside was not acceptable inasmuch as they could not produce any evidence to that effect at the time of initial adjudication or at the time of de novo adjudication. The Balance Sheet was a statutory document prepared under the Companies Act and was an authenticated document. The quantity not accounted in the RG-1 evidences clandestine clearance.
We have considered the submissions by both sides on the finding of the Commissioner. We find that the Commissioner has relied on the following case-laws not to rely on the Balance Sheet in preference to the statutory record.:
(i) Utkal Galvanizers Ltd. Vs. CCE, Bhubaneshwar-I 2003 (158) ELT 42 (Tri.-Kolkata).
(ii) Commissioner of C.Excise, Patna Vs. Universal Polythelene Industries 2001 (130) ELT 228 (Tri.-Kolkata) In Utkal Galvanizers Limited case, the Tribunal found that the Balance Sheet was not an evidence to find clandestine clearance by the appellants. In that case, it was held that the burden of proving the clandestine clearance was upon the Revenue. This had to be discharged by production of sufficient and affirmative evidence, which was lacking in that case. In the Universal Polythelene Industries case, the Tribunal disagreed with the Revenues contention that in cases of clandestine removal, the preponderance of probabilities was adequate basis and absolute proof was not necessary. Moreover, the respondents had explained the inflated figures in their balance sheet as for the purpose of loan, etc. We find that in the instant case, Revenue has not been able to obtain any evidence to show that the differential quantity had been clandestinely manufactured and cleared by VPSL. We note that the Commissioner relied on several case-laws wherein the Tribunal had rejected evidence of production of excisable goods in the form of entries in private note books and held that in the absence of sufficient corroborative evidence, charge of clandestine clearance could not be validly found. We would like to highlight the following findings of the Commissioner, in particular para 41 of the order.
41. The quantity of purported clandestine production and clearance has been arrived at on certain assumptions and presumptions. There is no evidence of excess consumption of electricity. There is also no evidence of unaccounted purchase of raw materials. The Department has not unearthed any evidence regarding the buyers of the so called unaccounted goods. Under these circumstances and following the ratio of the cases enumerated above, I am left with no other option but to accept the contention of the assessees and I am constrained to give the benefit of doubt and do not propose to demand duty with respect to suspected unaccounted goods. We do not find justification to interfere with this finding of the Commissioner. We reject the appeal.
(D) The Commissioners decision holding that there was no case for clubbing of clearances of eight units with those of VPSL is challenged on various grounds. The constitution of the eight units and the nature of its transactions with VPSL are submitted in the appeal as follows:-
1. Vijaya Fabrics: C. Mallikarjuna Reddy, (formerly working as liaison officer in VPSL), Managing Partner of the unit and the partner ship ratio between him and L. Kamalakar Reddy, was 70% and 30% and Rs. 50,000/- was extended by VPSL for construction of building on the land taken on lease and the labour and technical advice was provided by VPSL and VPSL did not charge the cost of fabric supplied to them but it was adjusted against the supply of the sacks made by them.
2. Vijetha Sacks: BVS Reddy (foremerly working as production supervisor in VPSL) is the Managing Partner of the unit. The other partner in the firm Sri A. Ramasubba Reddy, was also working as Supervisor in VPSL. No lease amount or electricity bill was paid to Vijay Fabrics and the cost of fabric was not charged by VPSL and the amount for meeting the expenditure was provided by VPSL.
3. Vijay Sacks: Sr D. V. Rami Reddy is the managing partner and the unit supplied labour to all other seven units and they were not paying the cost of fabric to VPSL and were supplying sacks on book adjustment.
4. Vandana Sacks: Sr. C. Sivarami Reddy (Formerly working as production assistant in VPSL) is the Managing Partner and the entire amount for staring the unit was provided by Sr. Laxmikar Reddy, MD of VPSL; the unit has not paid any amount towards lease amount, exlectricity charges to VPSL and also the amount required for meeting the expenditure was provided by VPSL.
5. EVR Enterprises: NSN Reddy (formerly working as plant supervisor) is the Managing Partner of the unit. The machinery was provided by VPSL and VPSL was meeting the expenses for payment of job charges, electricity consumption charges and the fabric was supplied by VPSL free of cost and no amount was received for the sale of sacks.
6. Venkateswara Enterprises: Sr U.V.S. Subrahmanyam (formerly working as typist cum clerk in VPSL) is the proprietor. He did not know where the capital came from. He is the name sake proprietor and has no financial interest in the unit and he had lent his name.
7. Srinivasa Enterprises: Sri K. Ramesh (formerly working as an operator in VPSL) is the proprietor of the unit. The day to day expenses were borne by VPSL and no amounts were paid by them for purchase of fabric and no amount was received for sale of sacks to VPSL.
8. Vani Sacks: the unit is a partnership firm existing in VPSL compound. The constitution of Vani Sacks has not been given in the SCN.
The following submissions made by the Revenue raised material challenge to the finding of the Commissioner.
(i) It is clear that VPSL never sold the fabric to the other eight units. They never paid any cash to the units for receipt of the sacks manufactured by the above units. In fact, there were purchases and sales between the above units and VPSL. All the transactions were book adjustments only and in respect of some units, VPSL provided the sewing machines and other machinery for manufacture of the sacks for which no lease was ever paid. The amounts due to the above units were credited to the accounts of the units in the books of account of VPSL which were never settled even after a long duration of three years. None of the so called independent units had ever tried to settle the accounts. This made it amply clear that the persons who were said to be the owners of the units were not really interested in the business of the units in view of the fact that they were name sake partners/proprietors and in reality, VPSL was the controlling authority. The stock position of the units was recorded by the production manager of VPSL on day to day basis and the units did not maintain any records of their own. These are the facts on record which were not in dispute by VPSL. Further, Sri K. Mohan Rao, Production Manager, VPSL, in his statement dated 17.02.92 stated that he was recording the production of scrap and stock available in all the units and prepared the production reports so that his MD could assess how much stock was ready and how much stock was to be made in all the eight units. This is also not disputed by the assessee nor the statement was retracted immediately by Sri Mohan Rao.
(ii) Non payment of any lease or other charges by the eight units to VPSL is not in dispute and no cash was paid to the units by VPSL for the sacks received from nor the units paid any amounts to VPSL for purchase of the same. These are the activities having financial implications and a bearing on the profitability of the units, as held in Lubricare Relays Ltd. Vs. CCE, Pune reported in 2000 (125) ELT 904-Trib.
(iii) Relying on M/s. Simplex Expeller Works Vs. CCE, Chandigarh-I [2001 (138) ELT 678 (Tri-Del)], it is submitted that denial of benefit of SSI exemption was sustainable when there was no material to suggest if partner had any independent source of income to start business and if other units were lacking sufficient machinery. The Tribunal had also decided that flow back of money from one unit to another being in the special knowledge of the assessee, it was for the assessees to prove that they had independent money transactions with no sharing loss and profits inter se. This order was upheld by the Supreme Court.
(iv) Pervasive and management control were prima facie indicators of inter-dependence and if these were not sufficient to show inter-dependence nothing, better would show the same. This was the ratio of the decision of the Apex Court in CCE, New Delhi Vs. Modi Alkalies and Chemicals Ltd. [2004 (171) ELT 155 (SC)].
(v) In the instant case, the eight units were floated with the financial aid extended by the MD of VPSL. In the case of Shri Venkateswara Enterprises, the Proprietor admitted that he was only a name sake proprietor and that shed and electricity were taken on lease from Smt. Suguna and that no rent and electricity charges were paid; that the labour charges and sales tax were paid by VPSL . All the expenses for maintenance of the above eight units were borne by VPSL. Their stock account was maintained by the Production manager of VPSL. Further, the eight units, among themselves provided certain facilities like machinery, electricity for which they never paid any charge to one another. This clearly established an inter-dependence and financial flow back among the units and also the pervasive, managerial and financial control exercised by VPSL over the other eight units. The Commissioner had ignored these material facts.
(vi) In the case of Servo Electronics vs. UOI [1996 (87) 599 (SC)], the Honble Supreme Court held onus is on the assessee to establish that such units are independent units. It was also held by the Honble Supreme Court in the case of M/s. Super Plating and Engineering Corporation Vs. Collector [1993 (67) ELT A156(SC)] value of clearance of three units clubbable when there was common control of production, income, expenditure and sales and definite flow back of finances.
(vii) It was submitted that the ratio of M/s. Gajanan Fabrics Distributors Vs. CCE, Pune [1997 (92) ELT 451(SC)] referred by the Tribunal while remanding the case did not apply to the instant case inasmuch as it was not the case of the Department that the above eight units were dummy units and the only contention of the Department was that these 8 units were floated by VPSL with an intention to wrongly avail the benefit of SSI exemption. Moreover, the judgment of the Apex Court was a remand order and it had not reached finality.
(viii) Reliance is placed on Devendra Industries Vs. CCE, Indore [2000 (123) ELT 1011 (Tri.)] wherein it was held that in order to successfully rebut the allegation of dummy unit set up by a manufacturer, it was necessary to show that the alleged dummy unit had its own premises with proper plant and machinery acquired by it; was purchasing its own raw material; mere registration of the unit as a SSI unit and a monthly attendance register by themselves did not go to prove that the alleged dummy unit was an independent manufacturer.
(ix) The decision of the Tribunal in Kores (India) Ltd. Vs. CCE [2003 (161) ELT 1116 (Tri.-Del.)] is cited in support of clubbing of clearances in the instant case. In the said case, employees of the Proprietor of the main unit were shown as Directors; Commercial matters of the four units were attended by appellant No.1, common infrastructure, common procurement of raw materials, centralized payment of employees, administrative and financial control over the four units in the hands of appellant No.1 and other financial arrangements between the units clearly establish financial inter-dependence and, therefore, the value of clearances of all units required to be clubbed for determining the eligibility of the main unit (appellant No.1) to SSI Notification Nos. 175/86-CE and 1/93-CE.
(x) The retractions made by some of the partners/proprietors of the units at a considerably later date cannot be considered as valid but only an after thought as held in Brosswell Mylliemngap Vs. CC [1998 (98) ELT 263(Tri.)]. It was held that statements retracted only at the time of reply to Show Cause Notice, statements to be regarded as true and voluntary.
(xi) Eight units were registered under different statutes and were floated only for the benefit of VPSL and for evasion of Central Excise duty. VPSL had provided machinery required for stitching on lease basis; lease was never paid. By setting up these 8 units, VPSL sought to evade duty due by remaining within the SSI exemption limit.
3. To counter the grounds raised in the appeal filed by the Revenue, the respondents rely on and reiterate the findings of the Commissioner in the impugned order. All the eight units existed in reality were equipped with the required machinery and were engaged in the manufacturing activity. They were statutorily recognized by different authorities including the department. The department failed to conclusively establish that they were dummies or that VPSL and the eight units were mutually interested and there was financial flow back between the VPSL and others. In Show Cause Notice Nos. 279/96; 165/96; 470/95; 86/95; 195/94 and 197/94, it was proposed to demand duty from VPSL and some of the eight units jointly. In view of the ratio of the Apex Courts decision in the Gajanan Fabrics Distributors (supra), the Department had treated the other units also as independent units and not dummies. In its Final Order No. 930 to 950/2003 dated 17.07.2003, the Tribunal had relied on this decision while remanding the case to the Commissioner for re-adjudication. The respondents also relied on the Circular No. 6/92 dated 29.05.1992 issued by the CBEC and the following case-laws which essentially held that clearances of two units could not be clubbed unless mutuality of interest, common funding, profit sharing and financial flow back between them were established:
(i) CCE, Jaipur Vs. Electro Mechanical Engg. Corpn. 2008 (229) ELT 321(SC)
(ii) Renu Tandon Vs. UOI 1993 (66) ELT 375(Raj.)
(iii) Techno Device Vs. CCE, Chennai 2009 (243) ELT 79(Tri.-Chennai)
(iv) Alpha Toyo Ltd. Vs. CCE, New Delhi 1994 (71) ELT 689(Tri.) 3.1. It is submitted that the Revenues argument that Gajanan Fabrics Distributors (supra) judgment did not lay down a precedent because it was a remand order, was not correct. The Commissioner had correctly held the various units to be independent. Their clearances could not be clubbed with that of the respondent as there was no evidence of financial flow back or mutuality of interest as found by the Commissioner. The CBEC Circular No. 6/92 dated 29.05.1992 had also mandated that clearances of a limited company could not be clubbed with clearances of another limited company or other units.
4. During hearing, the learned DR representing the Revenue relied on the judgment of the Apex Court in Lubricare Relays Pvt. Ltd. Vs. CCE, Pune [2000 (125) ELT 904(Tri.)]. Our attention was particularly invited to observations of the Tribunal in paragraph 12, which is reproduced below:-
12. The units had treated themselves as one for various purposes including financial transactions. The activities had been projected as group activities and the prospective customers, financial institutions and the creditors had been given to understand that they were dealing with a common entity. While the units themselves had treated themselves as one entity, for small scale exemption purposes when exemption is to small scale units, they profess to be treated as separate small scale units. At page 21 of the summary of oral submissions, it has been submitted as under :
We are projecting ourselves as a group not to evade duties of excise but to ensure the growth of each constituent by avoiding duplication of investment in costly factors of production like computers, hi-tech and precision machines, skilled and professional employees so as to achieve maximization of profits. When the group themselves was treating all the units as one entity, the onus lay upon the appellants to establish that they were separate units for the purposes of small scale exemption. (Refer Supreme Court decision in the case of Servo Electronics v. U.O.I. - 1996 (87) E.L.T. 599 (S.C.).
4. We have carefully considered the case-records and the rival submissions. The Commissioner found that VPSL kept track of the stock of sacks available with the various units in order to meet its dispatch schedule. VPSL had maintained individual accounts in the name of these units in its ledger. VPSL made book adjustments of their transactions without making payment and receiving payment for each sale and purchase. These were commercial practices and did not involve financial flow back between VPSL on the one side and the eight units on the other side. There was no basis for the allegation that VPSL had advanced finances to the persons concerned with setting up of the units. The evidence relied upon by the department was statements given by seven individuals. In adjudication proceedings and the earlier proceedings before the Commissioner and the Tribunal, it was claimed that these units were independent and ran on their own resources. In the absence of evidence establishing financial flow back between VPSL and the eight units, he found that the claim of the respondents had to be accepted. He also found that the units involved had not been dealing exclusively with VPSL but had also other customers such as Nagarjuna Fertilizers, KLJ Plastics, Sulguti Plastics, Deccan Syntex Ltd. etc. That they were recognized as SSI units by the Department and other authorities concerned also could not be ignored. All the units had existed in reality, had separate machinery and were, therefore, not dummies. He also relied on various judicial authorities in finding that clearances of the eight units could not be clubbed with those of VPSL.
(a) From the records it appears to us that the stitching units were set up at the instance of Shri Laxmikar Reddy, MD, VPSL. He also extended financial assistance to a couple of persons with whom partnership firms were set up. These factors cannot be held against VPSL and in support of clubbing of clearances denying the parties the Small Scale Industry benefit. However, the case made out by the Revenue is that the conduct of the stitching units was as if they had no proprietary interest in the business. They did not keep records of production whereas VPSL maintained detailed records of production of each of the stitching units in its records. VPSL did not collect charges for leasing its machinery to some of the smaller units. Where lease amounts were due, the same were not paid by the stitching units. M/s. Vijetha Sacks, M/s. Vandana Sacks and M/s. EVR Enterprises did not pay electricity consumption charges which was made by VPSL. The stitching units, which leased the machinery to other such units did not collect the leasing charges; electricity charges so incurred were also not collected. These cannot be held as commercial behaviour if found true. One of the units provided labour for other units. Appeal does not say if these were provided free of charge. It is on record that the transactions of purchases of fabrics and sale of sacks by the stitching units are not settled between the respective stitching unit and VPSL even after three years. It would appear that VPSL and the stitching units did not function as independent units; they operated a common pool of fund. It is not clear from the records that consideration was exchanged between VPSL on the one hand and the stitching units on the other in respect of any transaction during the material period. In the circumstances, we are handicapped in taking a clear view of the relationship between the stitching units and VPSL i.e. whether the stitching units were a front for carrying out manufacturing activities by VPSL in order for impugned clearances to qualify for the SSI exemption.
(b) The factual position becomes less clear, also on account of the claim by VPSL that they and the stitching units formed a group. In a letter No. VPSL/RI/282/93-94 dated 02.02.1994 addressed to Reliance Industries, VPSL had claimed as follows: To avail excise and other benefits, we have floated group of companies and we will get the work done in these companies. For this reason only, we are procuring 99 MTs in different sister concerns. This special request was made in all the orders placed for supply of raw materials with RIL and also for purchase from IPCL.
(c) It is seen from the records that VPSL supplied HDPE bags to Nagarjuna Fertilizers and Siliguri Cements for making bags respectively for packing fertilizers and cement. HDPE fabrics were suitably cut and folded before dispatch to the stitching units. Obviously, the stitching units were purchasing the fabrics cut and folded in sets necessary for stitching into the required number of bags. The stitching units could not have sold the bags made from the fabrics sold by VPSL to anybody else. There is a huge difference between the sale price of bags sold by the stitching units to VPSL and the price for their further sale by VPSL. The difference is around 100%. The stitching units were not at liberty to sell these bags themselves to the customers of VPSL. Obviously, the transactions between the VPSL and the stitching units do not appear to be at arms length.
(d) It was found that VPSL had accounted in their Balance Sheet for the year 1989-90, manufacture of 12,86,400 HDPE bags in the years 1988-89 and 1989-90 and receipts involving duty liability of respectively Rs. 8,28,241/- and Rs. 4,60,218/-. The impugned order dropped the proposal to demand this amount of duty for want of conclusive proof. VPSL had attributed these entries of production for the years 88-89 and 89-90 as a mistake. This explanation, we find, is not at all acceptable. Balance Sheet is prepared on the basis of financial records of the assessee for the relevant accounting year. Based on these records, Chartered Accountants prepare and certify the Balance Sheet. The assessee has not given any convincing explanation for these figures of realization towards production and sale of HDPE bags in 88-89 and 89-90. This aspect becomes all the more relevant in the context of VPSL recording in its ledger, details of production of HDPE bags by the stitching units involved. The Commissioner has not examined whether the assessee also treated the stitching units as a part of itself as a financial unit. In the Lubricare Relays Pvt. Ltd. (supra), the Tribunal observed as follows:-
When the group themselves was treating all the units as one entity, the onus lay upon the appellants to establish that they were separate units for the purposes of small scale exemption.
(e) Another allegation of tapes and fabrics clandestinely manufactured and cleared by the respondents during the material period was dropped by the Commissioner treating the production reports maintained by Shri K. Mohan Rao, Production Manager, as fictitious. These reports were maintained for several years 1989, 1990, 1991 and 1992. The explanation offered was that the reports were maintained to show better than actual performance by the unit. Possibly the only person who could have been interested in these particulars was Shri Laxmikar Reddy, Managing Director, VPSL. It is on record that he had never seen these production reports. Therefore, the claim that the accounts were dressed up to satisfy any functionary of VPSL is obviously not true. As per these production reports, the final products weighed much higher than the inputs on several days during the material period. The Revenue has not found out the reasons for this discrepancy advanced to resist the demand of duty by the Department on the finished products allegedly manufactured without accounting.
(f) The charge of setting up of new units to avail undue SSI exemption has been denied relying on several case-laws, all of which held essentially to the effect that unless there was common funding and financial flow back between any two units, their clearances cannot be clubbed for determining the eligibility to SSI exemption. From the facts as presented to us, we are not able to decide whether common funding and financial flow back are present in respect of VPSL and the stitching units. The Boards Circular No. 6/92 dated 25.09.1992 clarified that normally clearances of two limited companies or partnership firms cannot be clubbed. However, this guideline does not prohibit a finding of different entities including the limited ones actually constitute a single integrated financial unit and attempt to evade duty of excise by availing undue SSI exemption if the facts so warrant. As the material facts relating to the case of clubbing are not clear from the records and in view of the elaborate claims in support of the respective cases canvassed by the assessee and the Revenue, we are inclined to remand this dispute for a fresh decision of the Commissioner after following the principles of Natural Justice.
(g) As regards the Gajanan Fabric Distributors case (supra), as rightly argued by the Revenue, the said judgment was a remand order. On queries by the Bench, it transpired that the demand raised against both the main unit and the other units was eventually sustained by the Tribunal and the Honble High Court of Bombay. It is a material fact which was not available to the Commissioner when he decided the dispute.
6. In the Show Cause Notices 86/95; 470/95; 165/96 and 279/96, demands were proposed from VPSL jointly with one or more stitching units. In addition to the plea based on Gajanan Fabric Distributors case (supra), it was argued that since the nature of transactions were known to the Department when Show Cause Notice No. 19/92 was issued longer period of limitation could not have been validly invoked to raise further demands on the same grounds in the subsequent Show Cause Notices. These proposals need to be examined in the light of our observations in the above paragraph. It will be open to the parties to raise all grounds including limitation. The dispute is therefore, remanded.
E. Another challenge to the impugned order concerns dropping of the proposal to demand differential duty on the impugned clearances on account of their under valuation. The Revenue seeks to recover duty on these sacks on the value realized on their sale by VPSL. The ground on which the price of VPSL is sought to be made the assessable value is that the special relationship between VPSL and the stitching units. The resolution of this dispute depends whether Notification No.53/88-CE & 148/90-CE applied to the impugned clearances and, if not, whether the clearances of the stitching units are liable to be clubbed with those of VPSL. Respondents are at liberty to defend their case on any ground they wish to raise. Therefore, this dispute also stands disposed by way of remand to the Commissioner.
F. The Revenue challenges the order of the Commissioner in so far as it allows the clearances made by it during the material period benefit of Notifications No. 53/88 and 148/90. The Commissioner found that there was no dispute that the finished goods of VPSL had been manufactured using duty paid granules. The exemption under the notifications was subject to this condition and that modvat credit was not availed of the duty paid on the granules. The Revenues case is on the basis that the Form-IV Register in which the respondent accounted respective PVC granules does not contain details of the invoices under which the granules were received. When the Notification was conditional, it was the bounden duty of the assessee to satisfy the conditions laid down under the Notification. The Commissioner had not given any finding as regards availability of invoices evidencing duty payment of HDPE granules.
10. In the counter to the appeal filed by the Revenue as an analysis of the said appeal, the respondents reproduced the findings of the Commissioner to the effect that the duty paid under all these granules was not a disputed fact. The receipt and issue of granules were properly reflected in the Form-IV Register of VPSL. The respondents submit that the Revenue had never challenged the duty paid character of the granules. These were duly entered in the Form-IV Register, which was inspected and audited.
11. Though we find some merit in the contention of the respondents, the Revenue has raised a valid ground that to qualify for the exemption allowed by the Commissioner, the assessee had to satisfy the condition of the Notification which required that the impugned goods were manufactured from duty paid granules. During hearing, the respondents submitted a copy of the CBEC Circular No. 28/88-CX-3 dated 24.11.1988. This Circular was to the effect that exemption to goods at Sl. No. 39 of Notification No. 53/88-CE was merely conditional to the effect that the goods should have been of duty paid nature and normally there was no need to demand documentary proof of payment of duty in each and every case unless the officer was satisfied with its genuineness. In the instant case, since the entitlement of the impugned clearances to the exemption extended at Sl. No. 39 of Notification No. 53/88 Central Excise is questioned and at Sl No,40 (A&B) of Notification No. 148/90 Central Excise later, we are inclined to allow this appeal of the Revenue by way of remand for the assessee to establish that the impugned goods were eligible for the exemption. In view of the fact circular and the age of the dispute, it is made clear that it will be enough if reliable collateral evidence is produced by the assessee to establish the duty paid nature of the granules used as raw materials for production of the impugned goods and nonavailment of modvat. It is hoped that the Commissioner shall be decide the case within three months of receipt of this order.
F. Revenue has challenged the Commissioners decision to drop the proposal to confiscate excess 1,05,500 poly sacks found not accounted in the RG-I of VPSL on the date of visit of the officers finding that the assessee entered the goods in the RG-I on their provisional release after seizure. It is submitted that the finished goods had not been accounted in the statutory production record was not in dispute. Rule 173 Q 1 (b) of Central Excise Rules requires the assessee to account for the impugned goods. Failure to account goods produced satisfactorily will entail the goods rightly liable to confiscation as held by the Tribunal in the cases of Venus Rubber Industries Vs. CCE, New Delhi [1997 (94) ELT 597(Tri.)], Rajasthan Petro Synthetics Vs. CCE, Jaipur [1997 (95) ELT 549(Tri.)], Kirtronics Vs. CCE, Kanpur [1999 (111) ELT 822(Tri.)], Corona Cosmetics & Chemicals (P) Ltd. Vs. CCE [1991 (55) ELT 118(Tri.)], Snack Foods (P) Ltd. Vs. CCE, Chandigarh [1987 (31) ELT 231]. The assessee has argued that it had no intention to evade payment of duty. Appreciating this position, the Commissioner had decided that there was no warrant for confiscation. Even otherwise, applying the exemption available under Notification No. 53/88-CE, it was seen that even if an extremely adverse view was taken, no duty would become payable.
12. We find that on 01.07.1994, when the officers visited M/s. Vijetha Sacks, the assessee had not entered a quantity of 1,05,500 laminated printed HDPE sacks in their statutory production register RG-I. We do not find any acceptable explanation advanced by the assessee for not accounting this huge quantity of finished goods in its RG-I register. Accordingly, we vacate the order of the Commissioner and remand this dispute to be decided afresh by the adjudicating authority after hearing the respondents.
13. The remand proceedings will be governed by the decision on the entitlement of the clearances to exemption under Notification No.53/88-CE and 148/90-CE wherever relevant.The appeal is disposed of on the above terms.
(Pronounced in open Court on 08.09.2010) (P. KARTHIKEYAN) Member (T) (M.V. RAVINDRAN) Member (J) /pr/