2001 (2) TMI 485 - AT - Central Excise

Appeal to Appellate Tribunal - SSI Exemption - Accountal of goods - Demand - Clandestine removal

Summary

Issues Involved:
1. Whether the Assessee was manufacturing Rubber Beltings with less than 25% Rubber Compound.
2. Whether the benefit of Notification No. 175/86 was available to the Assessee who was not maintaining statutory records and was involved in large-scale clandestine clearance.
3. Whether the Adjudicating Authority correctly determined the aggregate value while confirming the duty.

Detailed Analysis:

1. Manufacturing Rubber Beltings with Less than 25% Rubber Compound:
The Central Excise Officers, based on intelligence, searched the factory premises of the Assessee and found that the rubber beltings manufactured contained more than 25% rubber compound. This was corroborated by the test results of samples from a related company, Winner Rubbers, showing rubber compound percentages of 64.8% and 57.9%. The Commissioner confirmed the demand for central excise duty amounting to Rs. 26,54,781.71 and imposed a penalty of Rs. 10 lakhs, based on the Appellants' own calculations indicating the presence of more than 25% rubber compound in the beltings.

The Assessee argued that no sample was drawn from their unit and that the test results from Winner Rubber should not be applied retrospectively. However, the Commissioner accepted the calculations provided by the Assessee, indicating that the rubber beltings did indeed contain more than 25% rubber compound. The Tribunal found no merit in the Revenue's contention that the Commissioner should have sought further clarification from the Preventive Department, as the evidence provided by the Revenue was insufficient to refute the Commissioner's findings.

2. Benefit of Notification No. 175/86:
The Assessee contended that they were eligible for SSI exemption based on a registration certificate from M/s. Vikrant Udyog, which was issued on 14-10-1979. They argued that the benefit should be available from the date of the Notification (1-3-1986) as the factory had acquired small-scale status. However, the Commissioner disallowed the benefit prior to 24-8-1990, the date when the SSI registration certificate was issued to the Assessee, stating that the exact date of application for SSI registration was not produced.

The Tribunal held that the benefit of the Notification would be available only after the Assessee complied with its conditions, which included registration with the Director of Industries. The Tribunal found no merit in the Assessee's reliance on the registration certificate of M/s. Vikrant Udyog, as the certificate was issued to the entity and not the location. The Tribunal concluded that the benefit of SSI exemption would be available from 31-7-1987, the date the Assessee applied for SSI registration, and not from the date of the Notification.

3. Determination of Aggregate Value:
The Assessee challenged the aggregate value determined by the Commissioner, arguing that there were totalling and calculation mistakes. The Commissioner had accepted the calculations provided by the Assessee but added presumptive figures for missing challans, which the Assessee contested. The Tribunal agreed with the Assessee that the value of clearances for 1990-91 could not be worked out on a pro-rata basis using the available challans.

The Tribunal remanded the matter to the Adjudicating Authority for redetermination of duty liability, instructing that any calculation mistakes should be corrected after pointing them out to the Assessee and allowing them an opportunity to clarify. The penalty imposed was set aside, with the Commissioner given the liberty to impose a new penalty after redetermining the duty liability.

Conclusion:
The Appeals were disposed of with instructions for redetermination of duty liability and correction of calculation errors, and the penalty was set aside pending this redetermination. The benefit of SSI exemption was granted from the date of application for registration, not from the date of the Notification.