1995 (10) TMI 112 - AT - Central Excise

Summary

Issues Involved:
1. Clandestine manufacture and clearance of tread rubber.
2. Denial of opportunity to cross-examine witnesses.
3. Calculation of production based on assumptions.
4. Eligibility for SSI exemption.
5. Valuation of tread rubber.

Summary:

Issue 1: Clandestine Manufacture and Clearance of Tread Rubber
The Collector confirmed a demand of Rs. 51,81,048.50 u/r 9(2) of Central Excise Rules, 1944 read with the proviso of Section 11A(1) of the Central Excises and Salt Act, 1944, and imposed penalties on various individuals and the company. The case arose from the seizure of unaccounted tread rubber and subsequent investigations revealing large-scale unaccounted production and clearance of tread rubber by the appellant's company. It was alleged that the appellants clandestinely manufactured and cleared 889.900 metric tonnes of tread rubber from their factory without paying Central Excise duty, thereby contravening multiple provisions of the Central Excise Rules, 1944.

Issue 2: Denial of Opportunity to Cross-Examine Witnesses
The appellants contended that they were not given an opportunity to cross-examine the witnesses, and the statements recorded were not supplied to them. The Tribunal found that the statements were voluntary and there was no coercion. Since the case was based on the appellants' own statements, the question of cross-examination did not arise. However, the Tribunal noted that the appellants should have been allowed to examine the seized records and take copies, thus finding a violation of principles of natural justice to this extent.

Issue 3: Calculation of Production Based on Assumptions
The Tribunal observed that the Collector's findings were based on assumptions and presumptions regarding the consumption of raw materials and electricity. The Collector did not adequately discuss the evidence or the basis for the production figures. The Tribunal emphasized that the department must provide scientific evidence and detailed calculations to support their allegations. The case was remanded for de novo consideration, directing the department to rework the figures scientifically and furnish them to the appellants for their reply.

Issue 4: Eligibility for SSI Exemption
The appellants claimed eligibility for SSI exemption, which the department had not properly considered. The Tribunal directed the adjudicating authority to re-evaluate this claim during the de novo proceedings, allowing the appellants to present evidence supporting their eligibility for the SSI exemption.

Issue 5: Valuation of Tread Rubber
The appellants disputed the department's valuation of tread rubber, asserting that the price was lower than alleged. The Tribunal instructed the adjudicating authority to reassess the valuation based on evidence and provide the appellants an opportunity to contest the valuation during the de novo proceedings.

Conclusion:
The Tribunal set aside the impugned order and remitted the case to the original authority for de novo consideration, ensuring the appellants are granted an opportunity to examine seized records, contest the valuation, and present their case comprehensively.