1995 (6) TMI 132 - AT - Central Excise

Issues Involved:
1. Levy of penalty on M/s. Devi Rubber Products by the Collector of Central Excise & Customs.
2. Alleged evasion of excise duty by M/s. Devi Rubber Products.
3. Inconsistency in the Collector's order regarding duty liability and penalty.
4. Review and directions by the Board under Section 35E(1) of the Central Excises & Salt Act, 1944.
5. Evidence of unaccounted production and clearance of tread rubber.
6. Retraction of statements by various individuals involved.

Detailed Analysis:

1. Levy of Penalty on M/s. Devi Rubber Products:
The Department appealed against the Collector's order dated 12-11-1990, which levied a penalty of Rs. 3,00,000/- on M/s. Devi Rubber Products. The respondents also filed an independent appeal against this penalty. The Collector's order found the respondents guilty of various contraventions but only imposed a penalty without fixing any duty liability.

2. Alleged Evasion of Excise Duty:
The show cause notice issued on 24-11-1988 alleged that M/s. Devi Rubber Products manufactured and cleared tread rubber without paying excise duty from November 1983 to March 1987, resulting in duty evasion of Rs. 57,41,330.80. The notice also charged the respondents with manufacturing without a license, non-accounting of goods in the RG 1 stock register, and other violations of the Central Excise Rules, 1944.

3. Inconsistency in the Collector's Order:
The Department argued that the Collector's order was inconsistent. Despite finding substantial evidence of unaccounted production and clearance, the Collector did not fix any duty liability on the respondents and only imposed a penalty of Rs. 3,00,000/-. The Department highlighted various statements and observations in the impugned order that indicated unaccounted production and clearance.

4. Review and Directions by the Board:
The Board, exercising its powers of review under Section 35E(1) of the Central Excises & Salt Act, 1944, found the Collector's order to be legally incorrect and inconsistent. The Board directed the Tribunal to determine whether the Collector's order was legally correct and whether the demand should be confirmed in full along with the imposition of a penalty.

5. Evidence of Unaccounted Production and Clearance:
The Collector's order cited ample evidence of unaccounted production and clearance of tread rubber. Statements from various individuals, including the foreman, manager, and purchasers, confirmed that tread rubber was cleared without duty-paying documents. The Collector noted that these statements, despite being retracted, indicated substantial unaccounted production and clearance.

6. Retraction of Statements:
The respondents argued that the statements used as evidence were retracted and lacked substance. However, the Collector found the retractions unconvincing and believed that they were made to avoid consequences. The Collector's observations indicated that the evidence supported the allegations of unaccounted production and clearance, although the exact quantum could not be legally confirmed.

Conclusion:
The Tribunal found the Collector's order unsustainable due to its inconsistencies. The matter was remanded to the original authority for reconsideration, with instructions to provide the respondents a reasonable opportunity to present their case. Consequently, the penalty imposed on the respondents was set aside, and both the Department's and the respondents' appeals were disposed of accordingly.

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