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6.13 Sr. Counsel further argued that as regards clandestine removal of PVC resin is a raw material for Chinchwad plant of the appellants and finished goods for appellants' Ratnagiri plant. From December 1993 onwards, Chinchwad Unit were buying their PVC from Ratnagiri. Prior to December 1993, they were buying PVC form outside parties. In the form 3CD, submitted to Income-Tax Department by the appellants for the Financial Year 1993-94 (A.Y.: 1994-95), the appellants have declared closing balance of PVC resin 3244.00 MT as raw material at their Chinchwad Unit as on 31.3.1994, on which MODVAT credit was availed by the appellants. But in the next Financial year i.e. 1994-95 (A.Y.: 1995-96), The opening balance was shown as "Nil", indicating its unaccounted disposal. Therefore, the investigations were conducted by Respondent by calling for production, turnover and consumption figures of PVC resins of Ratnagiri and Chinchwad plant for the year 1993-94 and 1994-95. During the course of investigation, different position were submitted by the appellants with regard to transfer of PVC from Ratnagiri to Chinchwad. Therefore, the actual transfer of PVC were worked out by the Respondent on the actual consumption and PVC received from Ratnagiri out of that year's production, i.e., 1994-95. As per the statutory records maintained by the appellants, such as Balance-Sheet for 1994-95 and Form 3 CD submitted to Income Tax Department, PVC resin cleared from Ratnagiri Plant-Pipe Division at Chinchwad for captive consumption, that too, out of that year's production was reported as 20056 M.T. Based on this figure, the remaining PVC produced during 1994-95 is accounted under sales and closing stock. Hence, this figure, i.e. 20056 M.T. is considered as accounting figure by the Respondent in respect of PVC transferred to Chinchwad unit for captive consumption by the Appellants out 85,840 MT. PVC produced at Ratnagiri plant during 1994-95. Therefore, the PVC transfers were found as neither 18016.735 M.T. nor 17761 M.T. or 19877.56 M.T. as submitted by the appellants in their different submissions, but actually 20056 M.T. as shown in the balance-sheet/Form 3 CD during 1994-95. The other figures of opening stock, turnover and closing stock tallied for that year on the basis of above captive consumption figure, in the balance-sheet as below:

10. From the above it is seen that production of PVC shown a 85840 M.T. is inclusive of captive consumption figures of 20056 M.T. In the above 3 C.D., production net of captive consumption.

The facts of the case have been fully described above. From the facts, it would appear that the appellants had filed price list for FS 6703 trial run production. This has been approved. In answer to Question 2, the appellants state as follows:

    Question - 2                               Answer -2
"Do your buyers include persons/          "No. However, goods will be 
 Organization where you or your           cleared for captive consumption
 Partners or Directors or their           for our factory at Pune at the
 relatives are owners, share-holders,     same price, as applicable to
 having overall control over the          the other buyers."
 Affairs of those agencies."

 

18. In view of our findings as above, argument of the learned Counsel for the department that under the guise of some lot of materials of different grade are cleared by the appellants and the fact is established by the bagging report beyond any doubt is wrong in facts.

18A. Alternatively, it was argued by the learned Counsel that they are entitled to benefit of Notification 217/86 and he cited the judgment in the case of Mahindra and Mahindra v. CCE 1999 (31) RLT, page 257 which follows the judgment of the Bombay High Court in the Solar Pesticides case--57 ELT 201. Before the Bombay High Court, one of the question for consideration was about eligibility of exemption under Notification No. 35/81 as also the question of unjust enrichment in respect of claim for refund in respect of captive consumption. The Hon'ble High Court held that petitiners were entitled to take the benefit of Notification 35/81 and upheld the contention of the petitioner regarding unjust enrichment of captive consumption. The Supreme Court against the said decision of Solar Pesticides reversed the finding of the Bombay High Court in respect of unjust enrichment--Union of India v. Solar Pesticides 116 ELT 401 The decision of the Supreme Court will not affect the facts of this case. As stated alternative plea is also acceptable to us. In any case, even if it is held in favour of the Department, the amount involved is Rs. 1,54,97,836 which is the figure relating to removal of goods from Ratnagiri factory to Chinchwad. Therefore, we are of the view that this point is decided in favour of assessee. We therefore set aside demand of Rs. 2,65,54,914 relating to the alleged undervaluation.

21. As far as the second portion of the demand for duty is concerned, it is reflected in the sum of Rs. 2,65,07,250 on the ground that the quantity of 2295 MT of resin has been clandestinely removed.

22. The Department's case is the sales for the year is 63679 MT. Assessee's case was sale figure of 66923 M.T. The thrust of the argument of the Department is that what is contained in the Form 3 CD for the purpose of Income Tax, there has been different figures have been given in the said form for the purpose of statistical information. The argument of the counsel has been fully mentioned above. The problem in hand is reflected in the Annual Report of the Assessee (page 514 of the paper book). In fact, the important paragraph has been referred to in our stay order which directed the assessee to pay one crore in the said stay order. We have referred to note No. 24,25, 26,28 and 29 of the final printed accounts for the period 94-95. We have extracted paragraphs 28 and 29 of the said Annual Report. The main argument of the Department is the production figures and the consumption figures and what is given in the Income Tax Returns do not tally. In our view, this is missing in the paragraphs 86 to 89. The word net of captive consumption which has been given as double astrix mark has been omitted to be considered by the Adjudicating Authority. Had he considered the same, the thing would have been different one. Moreover, Shri Shridhar emphasized the fact that please look into RGI Register, RT 12 Return and sales invoices which will show what is the actual sales after removal and payment of duty. This point has not been considered in a proper way by the Adjudicating Authority. This needs verification. In fact what is contained in the statement in paras 85 and 86 of the impugned order does not take into account net of captive consumption which is marked by two asterisk marks in para 29 of the final accounts referred to above. We are therefore of the view that what is the total amount of sales as reflected in the invoices which have been filed along with RT 12 Return after giving an opportunity to prove their case on this point. We are (sic) therefore set aside that portion of the impugned order remanding this part for re-adjudication according to law.