9911796707
TMI Blog1997 (9) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... he duty leviable thereon. The Collector based his finding of such clandestine production and clearance of the goods on the statements recorded from their employees who mentioned about the shifts and the days the factory worked, the production capacity per shift as well as the statements of some of the customers who had purchased crown corks from them. These statements indicated that the appellant produced more crown corks than what had been brought on record and that the customers had purchased more quantities of crown corks and paid more price for them than those shown in the respective invoices. The Collector imposed the penalty on the Managing Partner of the appellant firm, Shri M.J. Johnson under Rules 9(2), 52A(5), 226 and 173Q of the Central Excise Rules while refraining from imposing any penalty on the other partners. Crown corks (175 gross) seized from the residence of Shri Norbert D Silva, Manager of the appellant firm were confiscated, giving the option for redemption subject to payment of fine in lieu of confiscation of Rs. 500/-. The order has been challenged by the appellant firm as regards the demand of duty and penalty imposed and by Shri Johnson insofar as the impos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of statements of their own employees and also of their customers. The retraction from the statements was belated, after receipt of the show cause notice. Apart from the statements of these concerned persons, there was also the recovery of a register from the residence of the Manager, Shri Norbert D Silva showing the particulars of removal of the product in excess of the quantity removed on payment of duty. The Manager as well as the employees of the factory had clearly admitted that only part of the quantity of raw materials received was entered in their registers and that raw materials not so accounted for were used for manufacture of finished product removed without record. They had stated that the capacity of plant was 750 gross per shift and that the factory was working 6 days in a week with 9 shifts per week. The Managing Partner had admitted in his statement that the capacity was 600 gross per shift. The Collector has gone on the basis of 500 gross per shift. Shri Ali pleaded that the submissions made in support of the appeal that the electricity consumption as certified by the State Electricity Board has no bearing on the production of the goods in the factory as has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow :- Entire quantity of the raw materials purchased are not accounted for in the records of the factory. Only 1/3rd of the total purchases are accounted in the accounts of the factory. The payments towards the accounted purchase of raw materials are made by way of Bank DD. The remaining amount for the unaccounted purchase i.e. 2/3rd of the total purchase are made by cash. The despatches of materials via Thaneermukham Bund were not accounted in the records of the factory even though goods sent via Aroor are covered with delivery notes, there will be excess quantity than that shown in the transport documents. The value of crown corks per gross shown in the invoices is Rs. 14/-. But actually we are collecting Rs. 19/- per gross for the sales effected. The cost as per account is collected as cheque or DD, the differential amount of Rs. 5/- per gross is collected as cash. The sale proceeds other than those shown in the invoices (i.e. the excess quantity of crown corks sold) is also collected as cash." 6. In his statement, the Manager also admitted about the recovery of register from his residence wherein details of receipt and issue of crown corks had been entered. He stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him, the figure originally written by him was 400 but this was scored out and the figure 600 was written. This cannot be taken as an indication of the statement taken under coercion. The production capacity has been given by others also. We find that, after referring to 600 gross per shift, he has proceeded to state that they were not utilising full capacity and 500 gross per shift was being manufactured. The statement has been written in his own handwriting. As observed by the Collector in his order Shri Johnson is a law graduate and his plea that he had given statement under duress is an afterthought. It is claimed by him that he could realise that he had given a factually wrong statement only after seeing the show cause notice as a copy of the statement had not been given to him earlier. This is not acceptable. He is an educationally qualified person and a law graduate at that. Even if a copy of the statement had not been given to him, as claimed by him, he would have known that he had written an incriminating statement and if it was not actually true and was contrary to his own perception but given as per the direction of the officers, nothing prevented him from making the posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Coming to the question of the Collector having rejected their plea based on the power consumption as certified by the State Electricity Board, we agree with the contention that the Collector should not have come to his finding on the ground that the period mentioned in the certificate, viz., 1984 to 1987 was different from the period in dispute. The former period was a longer one fully covering the latter, namely, the period in dispute. If anything, the power consumed in the shorter period of May, 1984 to January, 1987 would have been less than the number of units of power certified by the Electricity Board and the quantity of PP Caps that could be produced using such quantum of electricity could be only lower than the quantity indicated by the appellant. But such data and formulae had been disclosed by the appellant only when confronted with the charge of clandestine production and removal and not at any previous stage. The claim could not be proved. The said claim also does not accord with the statements regarding the production capacity and performance and the number of shifts worked. The plea is rejected. Nothing turns on the plea that the Thanneermukkom Bund was opened for v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber, viz. 6 shifts per week and not 9 shifts. He had also accepted their plea that they had given intimation of stoppage of production for 80 days. On that basis he had reduced the quantity of production to 1,96,500, 1,83,000 and 1,54,071 gross. The value of such production of the aforesaid quantities has been arrived at by the Collector applying the rate of Rs. 19/- per gross. From such values he has allowed deduction of Rs. 15 lakhs on account of small scale industry exemption and arrived at the balance quantity on which he has demanded duty, applying the rate of 5 paise per cap less 10% ad valorem. The appellant has raised two objections in this regard, namely, excess computation of production by taking a greater number of days in the three years and a higher production per day and a higher rate of duty which was applicable only in the last period, rejecting their plea that the rates as applicable in the respective years when the removals without payment of duty had allegedly taken place. These contentions are now taken up for examination. 12. A plea has been raised in the appeal that though in the show cause notice the production per shift was taken as 500 gross, the order go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36 days which appears to be due to the holidays claimed by them. This appears to be acceptable. This difference of 38 days relates to a period of nearly 33 months. We accept the plea that production is to be worked out for 744 days. 13. Appellant has taken a production figure of 400 gross per day and claimed the production to be 744 x 400 = 2,97,600. This plainly incorrect. As already held by us, the production capacity is to be taken as 500 gross per shifts. Moreover barring the three months period July, August and September when a single shift operation was carried on, in the other months, it was admittedly a 9 shift per week schedule that was followed. It works out to 1 1/2 shifts per day, a week consisting of 6 working days. On that basis, when out of 744 days, in months other than July, August and September, the production per day has to be taken as 500 x 11/2 = 750 gross. As the break up of the holidays claimed by appellant and the non-working days (total 58 for the entire period) is not available either in the appeal or in the Collector s order, we are not in a position to accept either the total quantity of production claimed by the appellant or that decided by the Collec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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