2001 (2) TMI 521 - AT - Central Excise

Summary

Issues Involved:
1. Alleged clandestine removal of tyres and evasion of central excise duty.
2. Validity of the Progressive Moulding Register (PMR) as a basis for duty demand.
3. Reconciliation of production figures between PMR and RG-1.
4. Consistency and reliability of evidence presented by the Department.
5. Admissibility of additional evidence post-hearing.
6. Limitation period for issuing the demand.

Issue-wise Detailed Analysis:

1. Alleged Clandestine Removal of Tyres and Evasion of Central Excise Duty:
The Department alleged that the appellants clandestinely removed tyres without payment of appropriate central excise duty amounting to Rs. 1,89,82,357/- for the period from November 1984 to February 1988. This was based on discrepancies found between the figures in the Progressive Moulding Register (PMR) and the statutory RG-1 register, suggesting suppression of actual production and evasion of duty.

2. Validity of the Progressive Moulding Register (PMR) as a Basis for Duty Demand:
The appellants contended that the PMR is not a statutory record but a private planning document maintained by a junior executive for internal purposes. They argued that it should not be used as the basis for such a significant duty demand. The PMR was described as a 'personal' record of the Senior Supervisor, planning, and not part of the factory's official accounting records.

3. Reconciliation of Production Figures Between PMR and RG-1:
A reconciliation exercise was directed by the Tribunal to reconcile the figures of production as per the RG-1 register and the PMR. This exercise revealed significant discrepancies between the figures initially presented in the Show-cause Notice and those derived from the reconciliation. The revised figures indicated a production of 22.91 lakh tyres as per the PMR, which was more than the moulding figure of 21.68 lakh tyres, contradicting the Department's initial claim.

4. Consistency and Reliability of Evidence Presented by the Department:
The Department's evidence was found inconsistent. Multiple sets of figures were presented, each differing from the other. The figures in the Show-cause Notice were different from those derived during the reconciliation exercise and further revised figures presented later. This inconsistency undermined the reliability of the evidence and the foundation of the Department's case.

5. Admissibility of Additional Evidence Post-Hearing:
The appellants objected to the introduction of additional evidence by the Department after the conclusion of the hearing. They argued that such evidence should not be considered as it was not part of the original proceedings and was generated post-hearing. The Tribunal agreed that the introduction of new evidence post-hearing was not permissible under the law.

6. Limitation Period for Issuing the Demand:
Although the appellants argued that the demand was time-barred, the Tribunal did not delve into the limitation aspect, having already decided to set aside the impugned order on merits.

Conclusion:
The Tribunal found that the Department's case was built on unreliable and inconsistent evidence, primarily the PMR, which was not a statutory record. The reconciliation exercise revealed significant discrepancies in the production figures, which weakened the foundation of the Show-cause Notice. Consequently, the Tribunal set aside the impugned order, providing consequential relief to the appellants. The issue of limitation was not addressed due to the decision on merits.