Customs, Excise and Gold Tribunal - Tamil Nadu
Mothi Rubber Industries vs Commissioner Of Central Excise on 26 May, 1998
Equivalent citations: 1998(60)ECC656
ORDER S.L. Peeran, J.
1. This appeal arises from Order-in-Original No. 8/91 dated 31.12.91 passed by the Additional Collector of Central Excise, Bangalore. The question that arises for consideration is as to whether there has been clandestine removal of tread rubber to an extent of duty of Rs. 2,05,500/- on 43,500 kgs. of tread rubber alleged to have been manufactured and cleared without payment of duty during the Years 86-87, 87-88.
2. The short facts are that on gathering intelligence that tread rubber manufacturers are evading" payment of duty by suppressing production, the officers of the Headquarters (Prev) Unit visited the said factory on 10.3.89 and recorded a statement of the proprietor. In the statement, he had inter alia stated that he was carrying on business of tread rubber. He was confronted with challans which had been seized from one of the suppliers viz., M/s. Chemtech Industries and further with regard to the supplies of carbon black. However, in the statement, he denied that he has received the goods in terms of the invoices shown to him. He also stated that the said supplier has shown it in the invoice for having supplied the goods to him, while in fact no such supplies were made. He also stated that he has written letter to M/s. Chemtech Industries briefing this fact and for using his name. He had stated that he has not received any reply from those people. He has also staled that he has not filed any complaint against him or brought to the notice of the Central Excise authorities. Based on the evidence on record of 51 invoices from M/s. Chemtech Industries with regard to supply of carbon black, the department has made out a case that he has manufactured 3 Tonnes out of this supply of tread rubber and have evaded payment of duty of Rs. 2,05,500/-.
3. Arguing for the appellants, the Ld. Counsel submits that he was not given copy of the 45 delivery challans, he has been given only copy of 6 delivery challans. He has specifically asked for the same, however, the Commissioner has recorded that he also confined on seeing all the invoices. He submits that he had specifically asked for these documents and the same had not been furnished to him which has resulted in the failure of principles of natural justice. The Ld. Advocate further takes us to all the evidence on record and points out the alleged defects in the invoice. He submits that these invoices are forged ones and no such goods were delivered to the party. He further submits that the ratio of 1:3 taken by the department is not correct. It is his submission that carbon black alone is not sufficient for producing the final product viz., tread rubber, the ingredients are re-claim rubber, citric acid, oil, natural rubber etc. He submits that no such evidence has been produced by the revenue of its uitlisalion. It is his submission that mere carbon black received by the appellants does not lead to the conclusion that there has been manufacture of its 3 items the final product. He points out to the order-in-original that the aspects pertaining to final production of goods in terms of these submissions has not been touched upon and hence the order is not proper. He further submits that on the basis of the appellants statement in another case, the Tribunal allowed the plea and set aside the impugned order in the case of Shyam Rubber Products in Order No. 528/97. He further brings to the notice of the Bench the judgment of the Tribunal as , wherein, the Bench observed that clandestine manufacture and removal cannot be held only on the basis of consumption of electricity, but there has to be other material factors to be considered like necessary machinery, man power, raw materials etc. The Tribunal also noted that copies of the documents has not been furnished and as a result held that violation of principles of natural justice. For a detailed consideration the Tribunal has remanded the matter for de novo consideration. The Ld. Counsel submits that as the order is not a speaking order, he does not mind if the Tribunal remanded this case for fresh consideration.
4. The Ld. DR opposes the prayer on the ground that the Commissioner has relied on the submissions made by the appellants and the invoices which were recovered from M/s. Chemtech by the investigating authorities and the receipt of carbon black is one of the items itself is sufficient to prove the manufacture of 3 times its ratio of the final product. He also refers to page-12 of the order-in-original, wherein, the Commissioner has recorded that the appellants were shown the invoices and that they wanted to proceed only on the legal submissions.
5. On a careful consideration of the submissions made, we notice that the revenue has proceeded only on the factor of receipt of carbon black. The appellants have at the initial stage itself at the time of recording the statement had stated that M/s. Chemtech had furnished invoices in his name and the invoices does not bear the appellants' signature. He has also corresponded with M/s. Chemtech briefing these facts. Therefore, there is a doubt raised at this stage itself as to whether the carbon black was really received by them or not. Their contention is that there is violation of principles of natural justice inasmuch as copy of these documents were not furnished to them. They also pointed out that for manufacture of tread rubber many other major ingredients are required. As there is no corroborative evidence with regard to the use of these material, this point is quite a valid point and taking into consideration this point and also the judgment cited in the case of Calicut Rubber, we are of the view that the matter is required to be remanded to the Additional Commissioner for fresh de novo consideration. The appellants shall be supplied with delivery challans and the appellants are entitled to defend themselves on the basis of the documents furnished to them. The factors for production of final product has been discussed in Calicut Rubber Ltd. and the ratio is applicable to the present case. The department has to show as to the use of other ingredients to come to the conclusion that 43,500 kgs. of tread rubber makes itself in to 3 times of final product.
6. At this stage the Ld. DR submits that an order can be passed to direct the authorities to retain the pre-deposits made.
7. The Learned Counsel does not object the above request.
8. We direct that the amounts which has been deposited shall not be refunded till the final adjudication of the original order.
9. Thus the appeal is allowed by remand.
(Pronounced and dictated in the open Court.)