2017 (10) TMI 743 - AT - Central Excise

Clandestine removal - Trade Rubber - duty demanded mainly based on consumption of Sulphur and holding that 435.050 MT of tread rubber was produced during the period from August 1980 to August, 1985 - the appellant is having grievance that why the Department has taken the quantity of tread rubber produced by them based on only one input i.e. Sulphur, whereas the Department had the figures of other inputs with them - Held that - when the Department does not have other documents seized by them, fair assessment of tread rubber manufactured/produced by the appellant could be in terms of average production taking consideration of the figures in case of all these four inputs mentioned above. After adding the production of these four inputs, viz. rubber, carbon black, electricity and Sulphur, the total comes to 8,22,115.8 Kgs. i.e. 822.12 MTs; if this total production is divided by four, the average production comes to 205.27 MTs. (822.12/4). Consequently, taking this as fair prudent assessment of production, we confirm the demand of Central Excise duty in case of production of 205.27 Mts of tread rubber - The duty in this regard is required to be computed by the original adjudicating authority to whom we are remanding this matter; but only for this limited purpose of quantification of duty. Penalty - Held that - penalty reduced from ₹ 5 lakhs to ₹ 50,000/-. Appeal allowed in part and part matter on remand.

Summary

Issues involved:
1. Duty demand confirmation based on consumption of Sulphur for alleged clandestine removal of trade rubber.
2. Allegation of not providing relied upon documents.
3. Production estimation based on non-scientific method.
4. Discrepancy in considering multiple inputs for quantification of tread rubber production.

Issue 1: Duty demand confirmation based on consumption of Sulphur for alleged clandestine removal of trade rubber.
The appellant was issued a show-cause notice for duty demands totaling to &8377; 35,36,906.10 for alleged clandestine removal of trade rubber. The duty demand was revised to &8377; 51,81,048.50. After a prolonged legal process, the Commissioner confirmed the demand of duty amounting to &8377; 14,99,801/- along with a penalty of &8377; 5 lakhs. The appellant contested this decision, arguing that the duty liability cannot be sustained based solely on the consumption of Sulphur, as there were other inputs like rubber, carbon black, and electricity that should have been considered for quantification of tread rubber production. The Tribunal, after considering the submissions, remanded the matter to the original adjudicating authority for a fair assessment of production based on all four inputs. The duty was confirmed for the production of 205.27 MTs of tread rubber, and the penalty was reduced to &8377; 50,000.

Issue 2: Allegation of not providing relied upon documents.
The appellant raised concerns about the non-provision of relied upon documents and the production estimation based on a non-scientific method despite specific directions. The Tribunal acknowledged these concerns and emphasized the need for a fair assessment based on all relevant inputs for production quantification. The Tribunal found that the Department had only considered the consumption of Sulphur for determining the tread rubber production, neglecting other crucial inputs. The Tribunal directed the original adjudicating authority to compute the duty based on the average production considering all four inputs.

Issue 3: Production estimation based on non-scientific method.
The appellant argued that the production estimation was based on a non-scientific method, highlighting discrepancies in the calculation methodology. The Tribunal, after thorough examination, found merit in the appellant's argument and emphasized the importance of considering all inputs for an accurate production quantification. The Tribunal, therefore, remanded the matter to the original adjudicating authority for a fair assessment based on all relevant factors.

Issue 4: Discrepancy in considering multiple inputs for quantification of tread rubber production.
The Tribunal observed that the Department's decision to base the tread rubber production quantity solely on the consumption of Sulphur was flawed, considering the availability of data on other inputs like rubber, carbon black, and electricity. The Tribunal emphasized the need for a comprehensive assessment based on all four inputs to arrive at a fair and accurate production quantification. Consequently, the duty was confirmed for the production of 205.27 MTs of tread rubber, and the penalty imposed was reduced to &8377; 50,000. The matter was remanded to the original adjudicating authority for the quantification of duty based on the average production considering all relevant inputs.