9911796707
TMI Blog2001 (9) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... Carbonate also known as forcol. On verification of the stocks, there was no difference found in the available finished stocks as compared to the recorded balances in their RG 1 register. However, in the stock of raw material, there was a shortage of 2429 kgs. of PVC resin and excess of 3572 kgs. of PVC chemical and 64825 kgs. of calcium carbonate as against the entries made in their statutory accounts. With regard to the shortage of 2429 kgs. of PVC resin, the party debited Rs. 20,464/- in their RG 23A Part-II. 2. During the search, the Officers also recovered a miscellaneous file maintained as private record by Shri Sachin the Machine Operator of the factory showing consumption of PVC Resin, Calcium Carbonate and PVC Chemical and number of PVC pipes manufactured in a particular shift. These records contained the particulars only for a period of seven days viz., from 27-12-95 to 2-1-96. As per these records, the party was using nearly 60 kgs. of calcium carbonate (forcol) for every 100 kgs. of PVC resin. The statement of Shri Sachin was recorded who deposed that in addition to the above; 7 kgs. of PVC Chemical had also been used for the purpose of PVC compound which was furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee suppressed the production of PVC pipes and cleared the same without payment of Central Excise duty. It is stated that during the physical verification 64,825 kgs. of calcium carbonate was found in excess. Thereby, corroborating the above modus operandi. It is alleged that they were engaged in the fabrication of records right from the stage of procurement of raw material upto the stage of clearance of finished goods. It is stated that as per the details annexed with the show cause notice, during the period, 1994-95, the quantity of PVC pipes manufactured as per the private records was in excess of 17,39,020 kgs. as against the actual quantity of 12,36,630 kgs. shown in the statutory records. Similarly, during 1995-96, the actual quantity produced is 3,22,407.30 kgs. Thus, during this period they have suppressed the production of 5,02,390 kgs. of the finished goods. It is stated that as per the physical verification, the average weight of one PVC pipe of size 110/16 is 10.575 kgs. Therefore, number of PVC pipes of this size manufactured out of the above stated quantity would come to 47,505 pipes. The rate of the pipe of this size is Rs. 498.45 per pole. Thus the value of 47507 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri A.K. Jain, Advocate for the appellants and Shri Mewa Singh, SDR for the respondents. We have considered the submissions made before us. As could be seen from the details given above that the main charge of the Department against the appellants, M/s. Super Pipes (P) Ltd. is that they consumed 60 kgs. of Forcol (calcium carbonate) for consumption of every 100 kgs. PVC resin as against 15 kgs. of calcium carbonate as reflected in their statutory records. This averment of the department is solely based on the entries in the private record of the party for only seven days viz., from 27-12-95 to 2-1-96, the particulars of which are appended in para 3 above. The department has further relied on the statement of Shri Sachin, the Machine Operator of the factory who has in fact himself maintained the said private record. Interestingly the department has no dispute with the quantity of PVC resin consumed by the party as reflected in their statutory records but has inflated the figures of consumption of Forcol from 15% to 60% and arrived at the PVC compound which deemed to have been manufactured by the appellants. 8. The noticee party pleaded before the Commissioner that the entries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 60% forcol in the raw material. This could even be enquired from M/s. Kabra Extrusion Technik Ltd., Bombay - the manufacturers of the machine. 9. The party was asked by the department to produce copies of purchase orders in respect of the rigid pipes and reports of various test agencies and the specifications laid down in the BIS i.e., IS 4985. On verification of these documents it was found that the test agencies had confirmed that the goods were as per purchase orders and as per the ISI specifications. They also produced the report of the Supreme Technical Authority on the Plastic Industry under the Ministry of Chemical & Fertilisers, Govt. of India who had opined, "In the testing laboratory and independent studies...... it is found that when the proportion of CaCO3 is raised from 7 to 11 parts, the pipe passes hydraulic, impact and reversion tests when tested as per IS : 4985-1988. Upto 15 parts of CaCO3 the test results show the same trend as for 11 parts. When the CaCO3 loading is 20 parts or more, then PVC pipe fails in hydraulic and other tests as well". 10. With regard to the detected shortage of 2429 kgs of PVC Resin and an excess of 3572 kgs of PVC chemica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lent amount. We find this approach of the Commissioner irrational and without any basis. There is no investigation conducted much less there is an averment as to the source from which such huge quantity of forcol was procured, how the payment for this was made and how it could have been used for the extra production of PVC pipes on the existing machinery of the party. There is also no finding as to how and to whom the goods so produced could have been sold since it is a definite averment of the appellants before him that the PVC pipes could be sold only to the Agencies of the State Government for the Public Civil Engineering works and there is no rebuttal of this averment of the party in the order of the Commissioner. On the argument resorted to by the Commissioner in his order, there should have been a shortage of forcol but on the contrary, there is found an excess of 64,825 kgs. of this item on verification of stock. This anomaly is not analysed in the order. 12. Furthermore, in the show cause notice issued in this case, the ratio of consumption of the forcol is raised from 10% of the quantity of the PVC resin as reflected in the statutory records to 59.5% but the consumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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