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TMI Blog1994 (12) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... und M/s. Auto Industries in addition to another unit by the name of M/s. Rubber Industries was existing in premises No. 29A. In the premises of M/s. Auto Industries the officers found some raw-material, comprising reclaimed rubber, raw-rubber. They also found in the premises of M/s. Auto Rubber Industries stock of tread rubber, raw rubber, reclaimed rubber, carbon black, French Chalk powder and fine Tar oil. On inquiries it was found that M/s. Auto Industries was a Partnership Firm of Shri V. Sambasivam and Shri S. Sridharan, whereas M/s. Auto Rubber Industries was owned by Shri S. Dhandapani S/o Shri V. Sambasivam. Inquiries also revealed that M/s. Auto Industries started manufacturing of tread rubber from April - May, 1981 and continued to manufacture tread rubber upto December, 1983. Upto Dec., 1983 there were three partners in the Firm in the name and style of M/s. Auto Industries. The three partners were, Shri V. Sambasivam, Shri S. Dhandapani and Shri S. Sridharan. It was also revealed that in December, 1983, Shri S. Dhandapani was released from the Partnership in the firm known as M/s. Auto Industries who started his own factory in the name and style of M/s. Auto Rubber Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of clearances made by M/s. Auto Industries during 1983-84 totalled to Rs. 10,94,223.80 and total value of clearance during the year 1984-85 was of the order Rs. 7,71,025.05. The appellants were therefore asked to explain as to why duty amounting to Rs. 1,00,671.72 should not be demanded from them and why penalty should not be imposed on M/s. Auto Industries for contravention of Rule 174 read with Section 6 of Central Excises and Salt Act, 1944. Rule 9(1) read with Rules 173F, 52A, 53, 173G, 173B, 173C and 222 of the Central Excise Rules, 1944 alleging that the appellants had manufactured excisable goods without a licence without maintaining statutory Central Excise accounts, without filing classification lists/price lists, without raising gate passes and without payment of duty. It was also alleged that the manufacturing operations were carried on a split up piece inter-se, pointed out to the intention on the part of M/s. Auto Industries to evade payment of Central Excise Duty by suppressing the fact of production and clearance by dissolving the existing firm and creating a new firm and thereby attracting the proviso to Section 11A of the Central Excises and Salt Act, 1944. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought on record to show as to why clearances of these two separate units should be clubbed together. 4. It was argued by the appellants that the Collector has contended that manufacturing activities have been conducted in the same premises namely door No. 29A and hence the clearances effected by or on behalf of one or more manufacturers from door No. 29A should be clubbed to compute the value of clearances effected under Notification No. 83/83 from door No. 29A. The ld. Counsel submitted that the ld. Collector proceeded to argue that the clearances effected from door No. 29A on behalf of M/s. Auto Rubber Industries as well as the clearances alleged to have been effected on behaalf of M/s. Auto Industries should be clubbed together for the purpose of Notification No. 83/83. It was argued that the above line of argument was not mentioned in the show cause notice and hence there is denial of natural justice to the appellant. 5. It was also argued that in case the Collector found that clearances were effected from door No. 29A, then he should have proceeded against M/s. Auto Rubber Industries who were the owners of the premises at door No. 29A after 1-1-1984 and not against the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rad Bhansali, the ld. SDR appearing for the Respondent submitted that M/s. Auto Industries with three partners before its dissolution were utilising premises No. 29 and 29A; that retreading service unit was demarcated in premises 29 and tread rubber unit was demarcated in premises 29A; that a licence was granted to M/s. Auto Industries in October, 1983 when presumably they were likely to exceeding clearance of goods valued at Rs. 6.00 lakhs; that within two months there was dissolution of partnership, surrender of licence by M/s. Auto Industries with 3 partners and creation of proprietorship concern in the name and style of M/s. Auto Rubber Industries by one of the erstwhile partners of M/s. Auto Industries; that all these operations were not done innocently but they were undertaken in a very planned manner with the conscious knowledge of the partners and deliberate intention that they were likely to exceed the exemption limit of Rs. 7.5 lakhs during the year 1983-84. Therefore, the ld. SDR submitted that the intention of the appellant was very clear in as much as the partnership was dissolved with the intention to evade payment of Central Excise duty; that this deliberate attempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t premises No. 29 from 1-1-1984 to 31-3-1984. 13. The issue No. 2 is determination of having regard to cost of packing in respect of the same goods being partly captively consumed and whether the sale price should be treated as the cum duty price. 14. The third issue is the limitation. 15. On the first issue whether the clearance should be clubbed, we find that the entire period from 1-4-1983 to 31-3-1984 can be divided into two parts. The first part will start from 1-4-1983 and end on 31-12-1983, when there were three partners in M/s. Auto Industries and they were operating in premises 29 and 29A. The second period shall be from 1-4-1983 to 31-4-1984 when M/s. Auto Industries had two partners and was working at premises No. 29. For examining the issue let us reproduce the Notification which reads as : in exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 and in suppression of the Notification of the Government of India under the Ministry of Finance (Department of Revenue) 80/80-Central Excise, dt. 19-6-1980 the Central Government hereby exempts the excisable goods of the description specified in Column (k) of the table hereto annexe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given to M/s. Auto Rubber Industries w.e.f. 1-1-1984; actual manufacture of tread rubber by M/s. Auto Rubber Industries started only from April 1984, machines for mixing, extruding and calendering were installed in premises 29A. Hence we are of the firm view that premises 29A was the factory and even after 1-1-1984 M/s. Auto Industries utilized these machines fitted in the factory in the premises at door No. 29A even during the period 1-1-1984 to 31-3-1984 in view of the peculiar circumstances of the case in as much as no production was recorded by M/s. Auto Rubber Industries during the period 1-1-1984 to 31-3-1984. We, therefore, agree with the findings of the ld. Collector on this issue. 17. It is thus very clear from the above facts which are not controverted by the appellants, that the goods were being manufactured from the same factory premises, first by M/s. Auto Industries with three partners from 1-4-1983 to 31-12-1983 and subsequently from the same factory by M/s. Auto Industries with two partners from 1-1-1984 to 31-3-1984. We, therefore, held that the clearances effected by M/s. Auto Industries with three partners from 1-4-1983 to 31-12-1983 and again by M/s. Auto Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ude the amount of duty of excise. In the instant case, the goods were cleared as exempted goods, no duty was being collected and paid therefore there is no question of deduction of Central Excise duty from the sale value declared by the appellants. In this view of the matter we do not find any infirmity in the order of the Collector in this regard. 20. Another contention vehemently put forward by the appellant was that Rule 9(2) cannot be invoked in as much as the goods were manufactured and cleared under the bona fide impression that they were exempted goods and the clearances were effected with the knowledge of the department but not clandestinely. For this contention they have cited and relied upon the ratio of the decision of the Hon ble Supreme Court in the case of the Elphinstone Spinning and Weaving Mills Co. Ltd., reported in 1978 (2) E.L.T. (J399). A lot of emphasis was laid that it was the bona fide belief of the appellant that the goods were exempted. However, we find that we have already examined the evidence on record in this regard and have come to the conclusion that the licence was surrendered only with a view to evade payment of duty and, therefore, the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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