9911796707
TMI Blog1998 (9) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... om bagasse in terms of Notification 191/80 dated 9-12-1980 as amended (in respect of printing and writing paper) and Notification 142/81 dated 8-7-1981 as amended (in respect of kraft paper) and, therefore, were not entitled to be cleared at nil rate of duty. 2. The brief facts of the case are that the Central Excise Officers visited the factory of the appellants from 26-11-1985 to 1-12-1985 and found that the appellants were not maintaining any records to establish that they were manufacturing paper containing 75% or more by weight of pulp made from bagasse. Statements of Shri K.K. Jhunjhunwala, Managing Director and Shri S.K. Bhowmik, Pulp Mill Incharge and Shri R.B. Pathak, Sales Manager and others were recorded in which they deposed inter alia that no records were being maintained by the factory, either statutory or private, for control over the quality and production of paper made from bagasse pulp with admixture of other pulps. Samples were also tested in the factory by Shri S.K. Bhowmik and by the technologists of another Paper Mill viz. M/s. Abhudaya Paper Mills, Faizabad and the results thereof revealed that the paper contained less than 75% by weight of pulp made fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en wrongly fixed as 50%; that the paper manufactured by them satisfied the conditions of the Notification and, therefore, the demand was not sustainable, and lastly they contended that in any event, the extended period of limitation was not available to the Department in the absence of any suppression on their part. The adjudicating authority upheld the charge of non-fulfilment of conditions stipulated in the Notifications and the charge of manipulation of records so as to avail nil rate of duty of assessment and confirmed the demand applying the extended period of limitation. Hence this appeal. 3. We have heard Shri R. Swaminathan, learned Consultant and Shri J.M. Sharma, learned DR. 4. The admitted process of manufacture which is set out in the reply to the show cause notice and reproduced in paragraph 3(1) at internal page 7 of the impugned order is as under : "That briefly stated the process of manufacture is that "the bagasse and old/teased gunny after receipt were stored in open space. There were two digesters installed in the factory and in these digesters bagasse and old/teased gunny bags were cooked separately by adding sufficient quantity of water and chemica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asse, percentage of bagasse are annexed hereunder. That the Department has accepted the figures of paper production shown by the appellants in their statutory records does not automatically lead to the conclusion that their recorded figures of quantity of bagasse received and used have also been accepted; in fact RT 5 returns containing figures of receipt and issue of raw materials and the Form IV register have been disputed by the Department as enquiries conducted by the Department revealed that most of the names and addresses entered in the appellants books as bagasse suppliers, other than M/s. Balrampur Chini Mills Ltd. who also supplied bagasse to the appellants from April, 1983 to November, 1985, were fictitious. The appellants had not maintained any proper account of bagasse or jute received. The Managing Director of the appellant company Shri K.K. Jhunjhunwala has also stated categorically on 26-11-1985 that no records were being maintained and the incomplete records produced on 1-12-1985 indicates that the records had been fabricated after the first visit of the officers on 26-11-1985. Since no records were being maintained, there was no method of verification from records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants with manipulation of these records and, therefore, reliance upon the approval of classification list in 1984 extending the benefit of the relevant notifications is misplaced. The submission of the appellant that the error in holding that the percentage of bagasse pulp by weight is less than 75% arises from the Department's applying uniformly 50% moisture content in the bagasse and paper recovery rate of 40% while the moisture content varies from 10% to 50% in bagasse while the recovery of paper is not always at the recovery rate is 55%, but average rate of 40% is also not acceptable because these are not the only factors which form the basis for holding that the conditions of the notifications have not been fulfilled; the quantity of bagasse received and used itself has been disputed by the Department. It is pertinent to note at this stage that the moisture content of 50% in bagasse as it comes out in the manufacture of sugar in a sugar mill has been certified by M/s. Balrampur Chini Mills from whom the appellants purchased bagasse. While we agree with the appellants that it is not possible to ascertain the percentage by weight of bagasse pulp by testing of finished paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1983 and November, 1985, there was any question raised with reference to any inadequacy of the records maintained. As regards the alleged excess receipt of bagasse, the accounts were maintained with reference to the challan, quantity, but the consumption was with reference to the actual quantity. As a consequence (in view of recording the receipts as per the challan quantity) there was physical shortage as compared to the book balance. In other words, no advantage was taken with reference to such alleged excess quantity. As regards rags (gunny bags), there was no short accounting of the quantity. The quantities were accounted with reference to the actual weight received and for which weight alone the payment is made which formed the very basis of transactions between the supplier and the appellants. Since it is a common case that such gunny bags are dirty, contain foreign materials, dust, etc., for ascertaining the gunny weight for payment, it is to be taken excluding moisture, foreign materials, dust, etc. It was accordingly taken. 11. As regards the moisture content in bagasse, M/s Balrampur Chini Mills Ltd. clearly advised the excise authorities that the moisture content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion of alleging suppression and invoking the extended period cannot at all arise. The present assumption is, in any case, not based on any test results or industrial average. 13. It is worth noting that the appellants have drawn attention, inter alia to the Board's Circular F. No. 8/37/64-C.X.VI, dated 30-4-1964 which relates to Notification 33/64 as amended by Notification 91/64, dated 17-4-1964 and prescribes the mechanics of conferring the concession with reference to the use of bagasse. 14. Although this Circular relates to a period prior to the period with which we are concerned, its essential features would still be relevant for our purpose. 15. What is important to note is that the responsibility has been cast both on the assessees as well as officers. While assessees have to adjust their processes and procedure and conform to the requirements of this Circular to maintain records properly according to it, the officers have also been given the responsibilities. 16. The appellants have been able to show that the officers have been visiting their factory for inspection and verification and have recorded what they found in order. The order-in-original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d opine from just examining the sample of the kraft paper. It is also interesting to note that while giving this opinion, Shri Lyngwa does not indicate the method and manner by which he conducted the test, if any and the basis on which his opinion rested. It also appears that his statement has also been recorded separately. Similarly, in the case of Shri Kanta Pandey itself notes that he has merely indicated the process of manufacture of the paper manufactured from the pulp and from fibres from various sources. Similarly, there is a statement of Shri Sameer Bhowmik in which he gives opinion about paper made from pulp, manufacturing process etc. 18. What strikes me is that if the Chemical Examiner of the Department on one hand and the Board itself on the other had one view and these Experts have given a contrary or different view, it was very necessary that their cross-examination should have been allowed all the more so when the appellants had questioned their independence and impartiality and referred to rivalry with other concerns in this regard and the classification lists had been approved first provisionally pending enquiry and thereafter finally. 19. It was also n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be rejected as held by Hon'ble Member (Judicial) or the matter is required to be remanded in the light of observations of the Vice President." Sd/- Sd/- (Jyoti Balasundaram) Member (J) (S.K. Bhatnagar) Vice President THIRD MEMBER'S OPINION 22. [Order per : P.C. Jain, Member (T)]. - I have heard Shri R.S. Swaminathan, ld. Consultant for the appellants and Shri R.S. Sangia, ld. JDR for the respondents. 23. The point of difference arising between the two Members (ld. Judicial Member & ld. Vice President) has already been set out above. 24. Records of the appellant in respect of raw-materials are not being relied upon by the adjudicating authority on the basis of statements of different persons as also on certain circumstances that records were not produced at the time of C.E. officers' visit to the factory or the entries are in the same ink. While the two circumstances mentioned above may only raise some suspicious, but these by themselves are not enough to discard those records. When the Revenue basis its case on statements of certain persons, it becomes the duty of the adjudicating officer to offer them for cross-examination for a request was made by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been dealt with in detail by the ld. Vice President in his order. 30. Keeping in view the overall facts and circumstances of the case, I am inclined to agree with the ld. Vice President for remanding the matter and readjudication in the light of directions given by him in para 20 of his order. Sd/- (P.C. Jain) Member (T) FINAL ORDER 31. In the light of the majority view, the impugned order is set aside and the matter remanded to the jurisdictional Commissioner of Central Excise for re-consideration and passing of a detailed order covering all the points raised by the appellants after allowing them an opportunity to cross-examine the experts on whose opinion and statements the Department has relied and whose cross-examination was requested by the appellants, and for recording a finding as to why the assessments which were initially made provisionally, and finally later on after enquiry/verification, were required to be re-opened at this stage, and to indicate the period for which, after due enquiry, the records were found correct and the period for which or during which there was sufficient reason to plead that the records were manipulated and if so, how and to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 1. 2(A) 2(B) 3. 4. 5. 6. 7. 8. 9. Aug,84 68965.70 - 68965.70 352.00 46.8% Below 75% Sept, 84 101281.90 - 101281.90 17600.00 43200.00 51% " Oct.,84 145800.30 - 145800.30 216000.00 65600.00 42.6% " Nov., 84 171143.30 - 171143.30 328000.00 76800.00 45% " Dec., 84 151187.40 - 151187.40 384000.00 67200.00 44.8% " Jan., 85 192072.90 - 192072.90 336000.00 86400.00 44.4% " Feb., 85 142192.66 142192.66 432.000.00 65600.00 44.9% " Mar., 85 151815.50 - 151815.50 328000.00 68800.00 46.1% " Apr., 85 150888.00 - 150888.00 344000.00 68800.00 45.3% " May, 85 191670.70 - 191670.70 432000.00 86400.00 45.5% " June, 85 161399.20 - 161399.20 36000.00 720000.00 45% " July, 85 201187.90 - 2011187.90 416000.00 91200.00 44.6% " Aug, 85 165025.80 - 165025.80 376000.00 75200.00 41.3% " Sept. 85 201282.50 - 201282.50 456000.00 91200.00 45.5% " &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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