1986 (6) TMI 173 - AT - Central Excise

Summary

Issues Involved:

1. Employment of more than five workers in the manufacturing process.
2. Liability to pay differential duty.
3. Excessiveness of the imposed penalty.

Issue-Wise Detailed Analysis:

1. Employment of More Than Five Workers:

The core issue revolves around whether the appellants employed more than five workers in the manufacturing process during the calendar years 1978-79, 1979-80, and 1980-81. The appellants followed the special procedure under Rule 96 Y, which restricts the number of workers to five. The show cause notice highlighted specific dates when more than five workers were allegedly employed. The Collector found that on 23-6-1978, 26-6-1978, 14-1-1980, and 21-3-1981, the appellant employed more than five workers. The records, including the daily workbooks and statements from workers, confirmed the employment of more than five workers on these dates. The appellant's argument that packing workers should not be considered as part of the manufacturing process was rejected. The Tribunal emphasized that the term "manufacture" includes all processes incidental or ancillary to the completion of the manufactured product, including packing.

2. Liability to Pay Differential Duty:

The Collector determined that the appellants were liable to pay differential duty of Rs. 1,88,024.75 for 1979-80 and Rs. 3,01,449.75 for 1980-81, based on the employment of more than five workers. The appellants contended that the calculations for duty were improper and that they had furnished the necessary details of the quantity and value of battery plates produced and cleared. The Tribunal directed the Collector to reassess the value for purposes of duty in light of the figures furnished by the appellants after due verification.

3. Excessiveness of the Imposed Penalty:

The appellants argued that the maximum penalty under Rule 96(ZZZ)(iv) could only be Rs. 2,000/-, and the Collector erred in imposing a penalty of Rs. 5,000/- under Rule 173Q. The Tribunal held that Rule 96YYY excludes the special procedure itself if more than five workers are employed, justifying the imposition of penalty under Rule 173Q. Considering the manner in which the evasion was carried out, the penalty was not deemed excessive.

Conclusion:

The appeal was dismissed except for the direction to the Collector of Central Excise, Madras, to rework the differential duty based on the documents produced and after due verification.