2007 (1) TMI 39 - AT - Central Excise

Issues Involved:
1. Clarity on clubbing of clearances.
2. Allegations of clandestine production and clearance.
3. Quantification of production based on formulas.
4. Applicability of Rule 209A for penalty imposition.
5. Appropriateness of penalties on both the proprietorship and the proprietor.

Detailed Analysis:

1. Clarity on Clubbing of Clearances:
The primary issue was whether the clearances of M/s. Treadwell Rubber and M/s. Excel Tyres & Rubber Products should be clubbed. The Commissioner examined this in light of Board Circular 6/92 and previous case laws such as Quality Steel Industries v. CCE and CCE v. Paper Packing Industries. The findings indicated that both units, although registered separately, were not independent due to common control and financial interlacing, justifying the clubbing of clearances. The Tribunal upheld this decision, citing substantial evidence of mutual financial interests and operational overlap.

2. Allegations of Clandestine Production and Clearance:
The Commissioner identified several infractions, including improper accounting of raw materials, production, and clearance of excisable goods without documentation or duty payment, and undervaluation. These were corroborated by documentary evidence. The Tribunal agreed with the Commissioner's findings, noting that the evidence supported the allegations of clandestine production and clearance.

3. Quantification of Production Based on Formulas:
The Commissioner used the Rubber Board's formula to quantify production, which was contested by the appellants on the grounds that it applied to synthetic rubber (Cisamer), which they did not use. Despite this, the Tribunal upheld the use of the Rubber Board's formula, noting that it provided a conservative estimate compared to the formula recovered from George Kurian, which suggested higher production. The Tribunal found no merit in the appellants' objections as this point was not raised before the Adjudicating Authority.

4. Applicability of Rule 209A for Penalty Imposition:
The Commissioner imposed penalties under Rule 209A, which was introduced on 14-4-1986. The appellants argued that penalties could not be applied retroactively. The Tribunal clarified that the penalties pertained to offenses committed from 1986 to 1990, thus justifying the application of Rule 209A. However, the Tribunal agreed that penalties could not be imposed on both the proprietorship and the proprietor simultaneously, setting aside the penalty on George Kurian.

5. Appropriateness of Penalties on Both the Proprietorship and the Proprietor:
The Tribunal acknowledged the legal principle that a proprietary concern is not distinct from its proprietor, referencing several case laws. Consequently, the penalty imposed on George Kurian was set aside, while penalties on the proprietary units were upheld.

Conclusion:
The Tribunal largely upheld the Order-in-Original, confirming the clubbing of clearances and the findings of clandestine production and clearance. The quantification of production based on the Rubber Board's formula was deemed appropriate. The penalties under Rule 209A were justified for the period post-1986, but the penalty on George Kurian was set aside due to the non-distinct nature of a proprietary concern and its proprietor. The appeals of M/s. Treadwell Rubber and M/s. Excel Tyres were dismissed, while the appeal of George Kurian was allowed, modifying the Order-in-Original to this extent.