1996 (12) TMI 219 - AT - Central Excise

Summary

Issues:
1. Duty demand on shortage of raw materials for manufacturing washing powder.
2. Calculation of duty based on production ratio of goods manufactured.
3. Reduction of penalty imposed.
4. Confiscation of plant and machinery.
5. Eligibility for benefit under Notification 175/86 for using a brand name.

Analysis:
1. The appeals arose from a common order where the appellant contested the duty demand of Rs. 99,440.46, penalty of Rs. 25,000, and redemption fine of Rs. 15,000 due to a shortage of raw materials for manufacturing washing powder. The lower authority concluded that the appellant clandestinely removed goods without payment. The appellant argued that the shortage should be considered based on the production ratio of washing powder and detergent cakes, not solely for washing powder. The Department did not object to this approach based on the production pattern of the appellant.

2. Considering the production ratio of goods, the Tribunal ordered that duty should be demanded based on the various varieties manufactured by the appellant in the previous year. The appellant's plea was accepted, and the duty calculation was to be based on the production ratio of goods. The Tribunal directed the lower authority to consider the break-up provided by the appellant for calculating the duty after affording an opportunity of hearing. Other pleas regarding assessable value could be raised before the lower authority.

3. Regarding the penalty, the Tribunal reduced it to Rs. 5,000 due to the quantum of goods involved and the duty attributable to them. The Tribunal found no consistent pattern of large-scale duty evasion by the appellant, leading to the penalty reduction. The confiscation of plant and machinery was set aside as there was no evidence of consistent large-scale duty evasion by the appellant.

4. The Department's appeal raised the issue of eligibility for the benefit under Notification 175/86 due to using another person's brand name for manufacturing goods. The Department argued that using the brand name made the appellant ineligible for the exemption. However, the Department conceded that the eligibility issue was pending consideration in another proceeding before the jurisdictional Commissioner. The Tribunal set aside the order and remanded the matter to the lower authority for fresh consideration after taking into account the outcome of the pending proceedings regarding the brand name ownership.

5. The Tribunal emphasized that the issue of brand name ownership and its impact on eligibility for the exemption should be considered based on the outcome of the pending proceedings. The matter was remanded for de novo consideration, allowing the appellant to raise any relevant points regarding the ownership of the brand name in the proceedings before the lower authority. The appeals were decided based on the above terms.