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TMI Blog1983 (3) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... sistant Collector, Kottayam Range on 3-7-1978 confirming demand of duty amounting to Rs. 1,42,230.02 against the appellant being excise duty for the period 1-2-1970 to 13-10-1972 in relation to the product described as cushion compound . This was pursuant to a notice to show cause having been issued on 28-8-1974 by the Range Officer concerned and after the party had filed reply, and after consideration of all the contentions, the Assistant Collector came to the view that the demand had been rightly made and held the appellant liable to pay the same. 3. The facts giving rise to this controversy are to the effect that the appellant s factory manufactures a number of rubber products, including one which they described as cushion but concede that it is also commonly known as cushion compound . Their main plea is that this item was not marketed or traded by them directly but was only used in a semi-finished stage as an intermediary product for the purpose of cushion backing of tread rubber, which is sent out to the market after due payment of duty. They thus contend that this product having been captively consumed in their factory in the same premises before reaching the stage of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scription given against Item 16A(2) and the levy of excise duty in respect thereto was correct in law. He thus felt that, in face of this position, there was no justification for reopening the issue on merits. 7. He also turned down the plea of the appellant that demand under Rule 9(2) of the Rules could be enforced only if there were surreptitious or clandestine removals and that in their case, the goods which were being produced and used for backing of tread rubber, were very much within the knowledge of the Excise authorities and that as such, the demand was not enforceable. He also observed that Rule 10 would not apply in such cases nor was there any time limit in this rule during the relevant period 1968 to 1972 and as such, he rejected the appeal. 8. In the revision petition before the Central Government, the appellant reiterated the same pleas, namely that what they were manufacturing was plain cushion, and not cushion compound as known in commercial parlance and that process of manufacture was not complete in the case of this item, as it was being used in a semi-finished stage inside the factory and was only an intermediary product. They also contended that, reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e built his arguments in this regard by referring to certain authorities to the effect that in order to attract the aforesaid rule, there ought to be clandestine removal, and that in cases where the party had been manufacturing and clearing goods within the knowledge of the Excise authorities, there could be no question of any removal of goods without the knowledge of the Excise authorities so as to give rise to a demand subsequently, and that in this view of the matter, the demand was barred by the time. Shri Kohli also at the end pointed out that the valuation of the goods for the purpose of calculation of duty has also been wrongly worked out on a highly exaggerated basis and that the Appellate Collector erred in not considering this aspect, though the point was raised before him. 11. Shri K.D. Tayal, Senior Departmental Representative appearing for the respondent controverted all these arguments by contending that the argument that the finished product was being subjected to duty and consequently the semi-finished product used in the manufacture thereof could not be charged to duty was not available inasmuch as principle of double levy was an accepted proposition in excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplementary arguments could be allowed to be urged in respect of the same matter. There would be no finality to judgments of Courts, if such a plea were to be entertained. 13. Consequently, we are of our firm view that the party cannot be allowed to urge any contention with reference to the excisability of the goods. Otherwise also, as observed in Tribunal s previous judgment in M/s Goodwin Rubber Works case, that this argument was not open because of Notification No. 20/82-C.E., dated 20-2-1982, which was incorporated in the Act, itself by virtue of Section 51 of Finance Act, 1982, giving it a retrospective operation with effect from the date of commencement of the Act, providing that all goods even when captively consumed as intermediary products, would be deemed to have been cleared from the factory of their manufacture for the purpose of levy of duty. The orders of the Excise authorities thus remain unassailable on this count. 14. The Tribunal also held in its previous judgment that Rule 9(2) of the Central Excise Rules has been rightly invoked. There is no reason to hold otherwise even after citation of some authorities by the learned Consultant for the appellant because t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bber. It is thus a clear case on facts that even the factum of manufacture of these goods or their use was not brought to the notice of the Excise authorities nor the stand of the appellant that these were not leviable to excise duty. In this situation, the argument of the appellant that the Excise authorities ought to have drawn the necessary inference from the fact that they knew that cushion backing of tread rubber was being done in this factory by making enquiries or investigations as to from where the cushion for such backing was being obtained, is too far-fetched to be considered. 17. We thus do not find it possible to accept the contention that demand under Rule 9(2) was not enforceable and we also observe that there is no built in limitation at the time in this rule. The argument that Rule 10 was not applicable does not seem to be arising because the Appellate Collector himself has held that this rule did not come in the picture in this case, and the demand has been confined only to Rule 9(2). 18. The argument of the learned Consultant based on another judgment of Hon ble Supreme Court, namely, Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Travancore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lculated. The appellant has challenged this on two premises, firstly, that the prices as prevalent for the years 1970-71 to which the demand relates are to be taken as the basis and not prices of 1974 when the demand notice was issued and further that the price of this item which is named as cushion or cushion compound is far lower than the finished product known as tread rubber with cushion backing and that the authorities erred in taking the value of the cushion or cushion compound to be the same as that of tread rubber with cushion backing and marketed out from the factory. We find both these pleas requiring verification. 21. As a result, whereas the appeal is dismissed on merits and the goods known as cushion or cushion compound consumed in the factory for the period in dispute, namely, 1-2-1970 to 13-10-1972 for backing of tread rubber are held liable to excise duty for the period 1-2-1970 to 13-10-1972, the amount of duty worked out is quashed and the matter is remanded to the Appellate Collector with direction to re-assess the duty after taking into consideration the prices prevalent for this item known as cushion or cushion compound before its use for backing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd clandestine removal not proved. Without entering into the argument of the learned Consultant Shri Kohli, in my view, available record overwhelmingly establishes that the Department was aware of the fact that the appellants had been manufacturing cushion compound in their factory and using it for captive consumption. For this, I may refer to the Kerala High Court judgment dated 16-1-1974 in O.P. numbers 1461 to 1464 filed before us. The appellants were petitioners in O.P. No. 1464 of 1972. The respondents were Range Officer, Central Excise, Assistant Collector of Central Excise, Collector of Central Excise and the Union of India represented by the Secretary, Ministry of Finance. For the purpose of the present appeal Paras 1 and 2 of the judgment are material. The relevant portions of the same, for proper appreciation, are extracted below : 1. The petitioners contend that cushion compound is being prepared in their factories for being used as a component for the manufacture of tread rubber with cushion backing and that therefore it cannot be validly regarded as a finished product liable to Excise duty. The Collector of Customs and Central Excise, Cochin issued orders as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout any objection for the past several years and allegations put forward by them that the said payment has been made through inadvertence and mistake is not correct or tenable. 28. Now, in view of such a counter-affidavit having been given before the Kerala High Court by the Union of India and respondent Excise Officers, the contention now advanced before us that for the failure of the appellants to mention in the classification list about the manufacture of cushion compound and its captive consumption the Excise authorities could not have known about such production or consumption is clearly not tenable where the authorities were clearing the end product consisting of cushion compound. The counter-affidavit shows that the authorities were very well aware that the appellants had been manufacturing and consuming this product for a number of years and in fact had been paying duty on the same. Whether or not the product was liable to duty is a different question. The question is whether on these facts Rule 9(2) could be said to be attracted. On these facts, it cannot be at all said that the appellants concealed something. The Excise authorities were fully aware of the fact of produ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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