1989 (8) TMI 221 - AT - Central Excise

Summary

Issues Involved:
1. Demand of Duty and Confiscation
2. Assumption of TDI Consumption
3. Clandestine Removal of Goods
4. Product Gradation and Classification
5. Valuation of Scrap and Under Valuation
6. Confiscation of Seized Goods and Penalty

Summary:

1. Demand of Duty and Confiscation:
The Collector demanded duty of Rs. 12.58 lakhs, confiscated four bundles of sheets with an option for redemption, imposed a penalty of Rs. one lakh, and confiscated the land, building, and machinery with an option for redemption on payment of a fine of Rs. 20,000/-.

2. Assumption of TDI Consumption:
The show cause notice alleged that the appellants consumed 42,500 Kgs of TDI, leading to the production of 93,369.23 Kgs of polyurethene foam. The appellants contested this, claiming consumption of only 38,750 Kgs. The Tribunal found the Collector wrong in assuming 42,500 Kgs and held that the actual consumption was 38,750 Kgs.

3. Clandestine Removal of Goods:
Based on the corrected TDI consumption, the Tribunal concluded that the total clearances of polyurethene foam should be 84,165 Kgs, not 93,369.23 Kgs. The Tribunal held that there was no clandestine removal of goods without payment of excise duty.

4. Product Gradation and Classification:
The show cause notice assumed 90% of production as deluxe commercial grade and 10% as waste. The Tribunal, however, accepted the appellants' claim that 36.5% of production was 3rd grade quality. It also held that the gradation of commercial and deluxe commercial grades by the appellants was correct, rejecting the Collector's assumption of all foam being deluxe commercial grade.

5. Valuation of Scrap and Under Valuation:
The Tribunal upheld the Collector's decision to increase the value of shreddings from Rs. 6/- per kg to Rs. 9.50 per kg and the value of side skin, bottom skin, and top skin to Rs. 16.50 per kg. However, it found no case for increasing the assessable value for sales to three dealers who had given advances, as the prices to all dealers were uniform.

6. Confiscation of Seized Goods and Penalty:
The Tribunal upheld the confiscation of 4 bundles of 3rd grade sheets and one bundle of top skin, with a redemption fine of Rs. 500/-. It set aside the confiscation of land, building, plant, and machinery, and reduced the penalty from Rs. 1 lakh to Rs. 500/-. The appeal was disposed of accordingly.