TMI Blog1995 (1) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... ules, 1944 read with Section 11A of the Central Excises Salt Act, 1944, I order that duty amounting to Rs. 81/- BED and SED Rs. 4.05 on the 180 kg. of button biscuits valued Rs. 810/- and Rs. 32,867.55 BED + Rs. 1643.38 SED on the value of Rs. 4,38,234/- representing the suppressed production shall be paid by M/s. Madhu Food Products." 2. Briefly stated the facts of the case are that on a visit to the appellant s factory premises on 5-6-1984 the Central Excise Officers found on physical stock verification some shortages and some excesses in the quantity of the finished product (biscuits) as also in the quantities of the raw materials. It was also noticed that RG-1 register showing the quantity of goods manufactured and accounted for in Form IV register in respect of raw materials were not written for the period from 26th May to 4th June, 1984. An investigation was undertaken which confirmed that the raw material account and the RG-I account were not maintained properly. Accordingly a show cause notice was issued to the appellants alleging that the appellants had suppressed production and removed goods without payment of duty and without accounting in the statutory records with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment during the year 1983-84. The demand of duty for this period is hit by limitation under Rule 9 as well as under Section 11-A of the Act. In support of this contention, the ld. Consultant cited and relied upon the ratio of the Tribunal s decision in the case of Bengal Chemicals and Pharmaceuticals Ltd. v. CCE, reported in 1990 (48) E.L.T. 436. The ld. Consultant also submitted that in view of the non-maintainability of the demand for duty there was no justification whatsoever for severe penalty of Rs. 10,000/-. In support of this contention, the ld. Consultant relied on the judgment of Hon ble Delhi High Court in the case of America Steel Re-Rolling Mills v. CEGAT, reported in 1991 (52) E.L.T. 15 and also the ratio of the decision of the Tribunal in the case of New Polymer Industries v. CCE, reported in 1991 (52) E.L.T. 145. The ld. Consultant therefore prayed that the demand of duty as well as penalty may be quashed. In support of his contentions, the ld. Consultant relied upon the following case laws :- 1. 1992 (58) E.L.T. 158 (Tri.) 2. 1988 (33) E.L.T. 794 3. 1989 (40) E.L.T. 472 4. 1990 (50) E.L.T. 520 5. 1994 (73) E.L.T. 7 (SC) 6. 1993 (63) E.L.T. 348 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Southern Steel Ltd. and SBS Organics wherein the A.P. High Court in the case of Southern Steel Ltd. [Para 14] had observed : * * * * * * * * 9. In the case of S.B.S. Organic, reported in 1990 (48) E.L.T. 475 [Paras 5], the Tribunal had held :- * * * * * * * * The ld. Consultant had submitted that in the light of these two decisions duty cannot be demanded on goods in the factory as they have not been removed and duty can be demanded only when the goods have been removed from factory. We observe that the Collector in his impugned order has not demanded any duty on the goods which were lying in the factory and seized and later on confiscated. 10. In regard to the shortage of 180 kgs. of Butter Biscuits, we find that there is no evidence on record to show that the Department was informed or an entry was made in the RG-1 register and hence we do not see any reason to interfere with the findings of the ld. Collector. 11. Then there is an allegation against the appellants that they had not maintained true and proper account of the raw materials. We also observe that on verification of the explanation given by the appellants, explanation was not found satisfactory. No su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y whereas in the case relied upon and cited by the appellants, the question was whether electricity was used for production of the goods and it was found that when there was a maximum production of goods in a particular month the consumption of electricity was zero and in those circumstances the Hon ble Supreme Court had held that, It is in the circumstances impossible to draw an inference that during this period, power was used by the appellants for manufacture of metal containers. No doubt it is a fact that it is not possible to calculate normal production with precise mathematical accuracy. 13. Another issue that arose out of the holding that there was suppression of production and consequent clandestine removal of the goods as and when they were produced, the ld. consultant had cited and relied upon the number of cases. Relying on the judgment of the Tribunal in the case of Associated Cylinder Industries v. CCE, reported in 1990 (48) E.L.T. 460, the ld. consultant submitted that the Tribunal had held : 19. We find that there is a lot of force in ld. counsel s pleadings in as much as a comparison between physical stock and RG record could only show that the statutory reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no evidence not to accept this plea. The Dy. Collr. has stated in his order that they produced vouchers for the purchase of the item at the time of the personal hearing before him. He has observed that it was difficult to prove the identity of origin of the Tops and Controllers and that it was difficult to establish the fact that the Tops and Controllers are bought out trading items as maintained by them and hence the benefit of doubt cannot be given to them. This view will have few takers. It was difficult for the Dy. Collector to accept the identity of the goods in question as bought out items as claimed by the appellants, then by the same taken it would not be possible to establish that they had been manufactured by the appellants themselves in their own Unit. He has drawn a facile conclusion that the benefit of doubt cannot be given to them. To allege evasion of duty and demand the same requires more solid and acceptable evidence and cannot be left to the vagaries of doubt. The case law cited by the ld. Counsel support their stand. It was held by the Tribunal in the case of M/s. Ebenezer Rubbers Limited v. CCE, Ahmedabad, reported in 1987 (10) ECR 407 that where sufficien ..... X X X X Extracts X X X X X X X X Extracts X X X X
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