Customs, Excise and Gold Tribunal - Calcutta
Sulara Chemicals (P) Ltd. vs Commissioner Of Central Excise, Bolpur on 8 October, 2001
Equivalent citations: 2002(145)ELT230(TRI-KOLKATA)
JUDGMENT
Archana Wadhwa
1. After dispensing with the condition of predeposit of duty and penalty, I take up the appeal itself with the consent of both the sides.
2. The appellants' factory was visited by the officers on 8.1.98, who conducted various checks and verifications. It was noticed that the appellants' final product i.e. Phenol Formaldehyde was in excess of balance as recorded in their RG-I. Corresponding shortage of raw material was also found in RG 23A Part I Register. The said excess found quantity of Phenol Formaldehyde was seized by the officer on the belief that the same was meant for clandestine removal. The statement of the appellants Representative were recorded. It was also noticed that the input/output ratio was to the extent of 1:2. The appellants principal raw material was Methanol and the ratio of consumption of Methanol to the quantity of finished goods produced was 1:2. Based upon the above ratio, the Revenue entertained a view that the appellants have suppressed the production of their final product and the same was cleared by them clandestinely without payment of duty.
3. Based upon the above facts, the appellants were served a show-cause notice proposing the confiscation of the excess found goods; confirmation of demand of duty of Rs. 26,654/- on the final product alleged to have been removed without payment of duty and imposition of personal penalty. The said show-cause notice culminated into the impugned order passed by the Additional Commissioner of Central Excise, Bolpur. Vide the said order, demand of duty was confirmed against the appellants along with imposition of personal penalty of identical amount and confirmation of interest. The excess found Phenol Formaldehyde was confiscated with an option to the appellants to redeem the same on payment of redemption fine of Rs. 70,000/-. On appeal against the above order, the same was confirmed by the Commissioner (Appeals) except, the same the matter was remanded for re-quantification of redemption fine in terms of provisions of Section 210A.
4. Shri B.N. Chattopadhyay, ld. Consultant, appearing for the appellants, submits that the unit started functioning only with effect from 13.11.97. Thereafter, on account of several break-down, the factory was closed for some time and again started working only on 1.1.98. He admits that their RG-I and RG 23A Part I records were not complete and attributes the same to absence of the Excise Clerk from 1.1.98 onwards. He submits that the shortages of the final product were related to excess production, which has occurred on account of non-making of entries in their records. He submits that there is no evidence showing that the appellants had any intention to remove the said goods without payment of duty. As regards the confirmation of demand of duty, he submits that the same is based on input/output ratio. He further submits that that initially they were also showing the said ratio in their records inasmuch as they were new and there were frequent problems faced by them. Such ratio adopted by them was only hypothetical and, thereafter, when the factory started functioning properly, the said ratio came down to 1:1.7. He submits that there is no evidence showing that the appellants had removed any portion of their final product without payment of duty. As such, there is no justification in confirmation of demand against them and imposition of personal penalty.
5. I have also heard Shri A.K. Mondal, ld. JDR appearing for the Revenue.
6. As regards the confiscation of excess found goods, the appellants have admitted that the same was on account of non-maintenance of proper records. There is nothing on record to show that such excess quantity of finished goods was to be removed by the appellants without payment of duty. As such, I hold that the confiscation of the same was not justified. However, as the appellants have failed to maintain the records properly, I hold that the imposition of personal penalty of Rs. 2,000/- upon them meet the needs of justice.
7. As regards the confirmation of demand on the findings of clandestine removal, I note that the same is based upon the consumption of raw materials. Keeping in view that the period involved in the present appeal is trail period of the appellant's Company and there is no evidence showing the clandestine manufacture and removal of the final product,the confirmation of demand of duty against the appellants is not justified. For the same, penalty imposed upon them is also set aside except for confirmation of penalty of Rs. 2,000/-. Appeal is thus disposed of in the above terms.
(Pronounced)