Customs, Excise and Gold Tribunal - Tamil Nadu
George John (Associated Rubber Works) vs Collector Of C. Ex. on 16 February, 1993
Equivalent citations: 1993ECR349(TRI.-CHENNAI), 1993(65)ELT542(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. This appeal is against the order of the Collector of Central Excise, Cochin. Under the impugned order a duty of Rs. 5,47,297.85 has been demanded from the appellant on the ground that the appellant had clandestinely manufactured and removed certain quantities of tread rubber and a penalty of Rs. 50,000 has also been imposed on various counts on the appellant. Appellant's plant and machinery have also been ordered to be confiscated under Rule 173Q of the Central Excise Rules, 1944 with option to redeem the same on payment of redemption fine of Rs. 2.0,000.
2. The learned Consultant for the appellant pleaded that the learned lower authority has charged the appellant with having manufactured and removed tread rubber during the years 1985-86 to 1988-89 (upto 8-12-1988). He pleaded that the learned lower authority has placed heavy reliance on the statement of the proprietor Shri George John, who in his statement is alleged to have stated that 0.400 Kgs. of sulphur is required to produce 33.580 Kgs. of vulcanisable rubber compound. He pleaded that the learned lower authority has taken into consideration the total quantity of sulphur consumed by the appellant and adopting the said ratio has upheld the charges of excess production against the appellant. He pleaded that as it is a perusal of the statement would show that the appellant had earlier mentioned the quantity of 0.440 Kg. of sulphur as against 0.400 as above but 0.440 was scored out and 0.400 was recorded as the ratio of sulphur for the production of the batch of rubber compound as above. He pleaded that the amount of sulphur consumed shown was only an approximation. He pleaded as it is the quantum of sulphur consumption for production of tread rubber varied depending upon the quality of rubber produced and there is no fixed formula in this regard. He pleaded as it is a number of raw materials which included carbon black, raw rubber, etc. are required for production of tread rubber and pleaded that the learned lower authority has only picked on sulphur as the basis for working out the total production based on the formula which at best could be considered only as an approximation. He has pleaded that sulphur is not one of the specified raw materials in respect of which a statutory record in form 4 was required to be kept and the learned lower authority should have considered the other raw materials also for working out the total production. He stated that the learned lower authority has not referred to any technical literature to appreciate the position in regard to the range up to which the sulphur could be used and cited before us the extract from the Encyclopaedia Britannica showing that sulphur content in the tread rubber could vary upto 3% and much higher for larder rubber. He pleaded that the learned lower authority's order is based on presumptions and assumptions and cited the judgement of the Hon'ble Supreme Court in the case of Oudh Sugar Mills Ltd. v. Union of India, reported in 1978 (2) E.L.T. (J172).
3. The learned JDR for the Department pleaded that Shri George John, the proprietor, has not retracted his statement and adopted the reasoning of the learned lower authority and supported the reasoning of the Collector.
4. We observe this is a case where large quantum of tread rubber has been alleged to have been removed by the appellant. A reading of the show cause notice shows that the authorities were of the tentative view that the quantum of raw materials used during the period in question had not been properly accounted for and the appellant in the reply to the show cause notice explained this discrepancy and showed that the position as set out in the show cause notice was not correct and that the shortage was marginal. We observe that the learned lower authority has not entered any detailed findings in regard to the total quantum of the raw materials which were used and the total quantum of tread rubber which emerged therefrom. The learned lower authority has merely gone by the quantum of sulphur used and had worked out the quantum of rubber produced based on the sulphur used per batch as per the statement of the proprietor of the firm. It is significant to note that sulphur is not prescribed as a specified raw material and in respect of this the appellant is not required to maintain a statutory account. The learned lower authority has also not adverted to the appellant's pleas that there could be variation in the use of sulphur for manufacture of tread rubber and there is no technical literature to show that the use of sulphur could not be otherwise than is set out in the statement of Shri George John. There is no allegation in the show cause notice that the appellant purchased any excess unaccounted raw materials nor any evidence has been brought on record to show by way of statements of the workers or any other corroborative evidence by way of despatch of the tread rubber or the receipt of the same by some buyers without the cover of Central Excise documents. In a case where the lower authority has gone merely by one of the raw materials without in any way taking the recorded quantum of other raw materials, the authority should have worked out the production figures also based on the use of the other raw materials particularly those which are specified raw materials and for which Form 4 record is required to be maintained by the appellant, more so when there is no allegation that there was any unaccounted quantity of raw materials which were purchased by the appellant. As it is we find there is a correction in the statement given by Shri George John in regard to the quantity of sulphur used and the authority has not examined in respect of the plea made whether it was feasible to produce tread rubber of the type manufactured by the appellant by using 0.440 Kgs. of sulphur as pleaded by the appellant. In view of the above, we hold that the learned lower authority has not examined the issue in depth and, therefore, we hold that the order passed by the lower authority is not a proper one and set aside the same and remand the same to the lower authority for readjudicating the matter after giving opportunity to the appellant in the light of our observations above. Accordingly the appeal is allowed by remand.