TMI Blog1995 (12) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... ficers estimated that 34 pcs. of plywood measuring 94.13 sq. mtrs. were in excess in the bonded store room and 1356 pcs. measuring 2456.80 sq. mtrs. were excess in the finishing room. During investigation, statements of Shri Kamal Kumar, Managing Director of the company and Shri A.K. Tyagi, Excise Officer were recorded. Thereafter the appellants were served with a show cause notice dated 11-7-1988 requiring them to show cause as to why (i) 1390 pieces of plywood measuring 2550.93 sq. mtrs. valued at Rs. 1,36,345.16 which were found not to have been properly accounted for in the records should not be confiscated under Rule 173Q; and (ii) duty should not be demanded on 252 pcs. measuring 533.38 sq. mtrs. of plywood valued at Rs. 32,006.02 removed from the factory in a manner otherwise than as provided in the Central Excise Rules. Thereafter on 19-5-1992 another show cause notice was issued by the Additional Collector requiring the appellants to show cause as to why duty amounting to Rs. 82,446.30 should not be recovered on excisable goods which appeared to have been removed in a manner otherwise than as provided in the Central Excise Rules. For the proposed recovery of this amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . of plywood measuring 2550.93 sq. mtrs. found in the finishing room were actually completely manufactured goods but not properly accounted for rendering it liable for confiscation under Rule 173Q, Shri Kumar submitted that the goods in question were evidently a mixed lot of different types and sizes of plywood/blockboard and which were not fully manufactured. He contended that the goods in question were not in fully manufactured state is evident from the fact that segregation/sorting of the goods found in the finishing room commenced on 1-2-1988 when the officers visited the factory and could be completed only on 3-2-1988 at 23.30 hrs. He submitted that the goods which were evidently in various stages of finishing and had not been sorted/segregated according to the variety and size etc. had not attained the stage requiring the entry thereof in the relevant statutory records. He contended that under these circumstances there was no violation in respect of these goods as well and they were accordingly not liable for confiscation. 5. Making his submission on the finding that 252 pcs. of blockboard measuring 553.38 sq. mtrs. valued at Rs. 32,006.02 had been removed from the factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch goods and had totally ignored the fact that the shortage, in fact, was accumulated shortage arising out of defective/unuseable veneers received from time to time since the beginning of the operations by the appellants. He submitted that such defective and unuseable veneers were being burnt by the appellants in their factory. He reiterated his stand that the demand confirmed by the Collector on the basis of a hypothetical production of commercial plywood during the period 28-1-1988 to 3-2-1988 was also not sustainable. He contended that the demand confirmed by the impugned order was also barred by limitation since in the first show cause notice issued on 11-7-1988 no duty was demanded and it was only after a period of nearly 4 years after the visit of the appellants factory another show cause notice dated 19-5-1992 was issued by the Additional Collector raising various duty demands. He reiterated his stand that the demand was barred by limitation on the grounds that no extended period could be invoked since the appellants had been availing exemption relating to SSI units under Notification 175/86 and in terms of their classification list approved by the Department from time to ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that 1356 pcs. of plywood and blockboard lying in the finishing room were fully finished goods and were liable for confiscation on account of not having been entered in the statutory records, the appellants case is that these goods were in various stages of processing and had not been entered into their statutory records, since they had not attained the character of fully finished goods. We are inclined to accept the appellants explanation in this regard since from the records of the case it is seen that on 1-2-1988 when the officers visited the appellants factory these goods were found as a mixed lot in the finishing room. The segregation of these goods was undertaken under the supervision of the departmental officers and it was only on 3-2-1988 that the segregation varietywise and sizewise could be completed. Having regard to the fact that the segregation and stocking of the goods in question took almost 2 days, we are inclined to accept the appellants contention that these goods were in various stages of finishing and had not attained the character of fully finished goods which could be entered in the statutory records. Under these circumstances and having regard to the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and such unuseable veneers are burnt in their factory. They have contended that the shortage taken into account represented the total accumulated shortage of defective/unuseable veneers received by the appellants since the inception of their manufacturing operation and accordingly the excess figure of about 40% shortage worked out by the Department on the basis of the book balance of the veneer at the time of the visit of the officers was erroneous. On this ground it has been contended that the demand confirmed by the Collector on the alleged production of commercial plywood out of the estimated shortage of veneer is erroneous and not sustainable. We would have been inclined to remand this point only for re-examination by the adjudicating authority in de novo proceedings in view of submissions made by the appellants. However, we do not find it necessary to do so since we find that the appellants contention that the demand for the recovery of duty on the goods in question was barred by limitation has considerable force. It is seen that the officers visited the factory of the appellants on 1-2-1988. On the basis of investigations carried out by them a show cause notice was issued o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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