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TMI Blog1985 (7) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... are manufacturers of rubber products falling under Tariff Item 16-A (2). Among other items they also manufacture tread rubber, cushion compound, and cushion backed tread rubber. The cushion compound manufactured in the factory was used by the appellants within the factory for the manufacture of cushion backed tread rubber and without payment of duty. Cushion compound manufactured and consumed by the unit would fall under Tariff Item 16-A (2) and the same was not exempted from payment of duty till the issue of Notification No. 208/72-C.E., dated 14-10-1972. 3. On 20-9-1974 a show cause notice was issued to the appellants, stating, that duty on cushion compound used for captive consumption within the factory for backing tread rubber was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment dated 16-1-1974 had held that cushion compound captivity consumed was a product falling directly within the description given against sub-item No. 2 of Item 16-A (2) and that the levy of excise duty in respect of the said item was correct in law. The Assistant Collector also held that Rule 9 (2) would be applicable as the removal amounted to clandestine removal. The Appellate Collector of Customs and Central Excise, Madras confirmed these findings by his order dated 12-6-1980. Hence the revision. 5. Shri Markose Vellapally, the learned Counsel for the appellants reiterated the grounds as put forward before the lower authorities. He argued that taxation of cushion compound would amount to double taxation. According to him, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder No. 756/83-D, dated 21-11-1983) (M/s. Rani Rubber Factory, Changnacherry, Kerala v. Collector of Central Excise, Cochin) and also in ED (SB)(T) 187/80-D (Order No. 633/83-D, dated 15-10-1983) (M/s. Ruby Rubber Works Ltd., Changanacherry, Kerala v. Collector of Central Excise, Cochin). Shri Raghavan Iyer urged that notice to show cause itself was a demand under Rule 9(2). He also urged that since the proceedings under Rule 9(2) were also quasi-judicial proceedings there is reference to showing cause against the imposition of the demand. Replaced reliance on AIR 1971 Bombay 386 (Prakash Cotton Mills Pvt. Ltd. v. B.N. Rangwani). 7. It is manifest from the materials placed that the appellants manufactured cushion compound during the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y itself and used in captive consumption for manufacturing of another by-product in the same compound and becomes chargeable to duty the moment it is removed in any manner out of the place where it is manufactured or produced in that campus or compound within those boundaries or is removed from the storage or store-rooms where it collects after it comes into existence as a result of manufacturing process of the end-product for which the factory is established. We also notice that the question of dutiability of the goods has been upheld by the Kerala High Court in O.P. Nos. 1461-1464 of 1972. In view of the settled legal position, it is no longer open to the appellants to state that the product is not dutiable. 8. Shri Vellapally mainly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Raghavan Iyer, the accounts are only from 2-2-1972 and the prior accounts have not been produced. That apart, the classification lists which form the basis for assessments have not been filed. If the classification lists had been produced, they would indicate whether the removal of these goods by the appellants was brought to the notice of the proper authorities. In the absence of the gate passes or the classification lists we are unable to hold, that on the basis of the entries in the stock taking report or RG-1 for the period from February,1972, knowledge for the earlier period could be attributed to the department. The appellants were admittedly clearing the cushion compound without payment of duty. It has been held in M/s. Ceakay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances we are of the view that the demand is in time for the period prior to 2-2-1972. It is, however, time-barred under rule 10 for the period from 2-2-1972 to 13-10-1972 since during this period the department had the knowledge that the appellants were using cushion compound captively without paying duty thereon. 10. An additional plea has been taken that the different rates of duty prevailing at the time of captive consumption have not been set out in the show cause notice and there is an error in the calculation at a uniform rate. Moreover, there should be exclusion of charges towards cutting, packaging, etc. We find that in the earlier decision in Order No. 633/83-D, dated 15-10-1983 (supra) such a plea raised by the appellants wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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