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TMI Blog1998 (8) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... t vide Order-in-Original No. 13/89, dated 31-12-1989, learned Collector of Central Excise confirmed demand for duty of Rs. 33,51,392.42 out of which the first appellant had already paid Rs. 15 lakhs. A penalty of Rs. 5 lakhs was imposed on the first appellant and penalty of Rs. 1 lakh was imposed on the second appellant as well as penalties of Rs. 10,000/- each were imposed on the third and fourth appellants and a penalty of Rs. 1 lakh was imposed under Rule 209A on the fifth appellant, as recorded above. 4. The subject matter involves two issues as follows :- (a) Allegation of suppression of production and clandestine removal of calcium carbide manufactured by M/s. Gulf Olefines Ltd. to the tune of 1429 MTs. (b) Inclusion of value of drums in the assessable value of calcium carbide supplied to M/s. DCW (5th appellant above). 5. With regard to the allegation of clandestine removal of calcium carbide, the department contends that M/s. Gulf Olefines created two agencies viz., M/s. Sandhya Agencies and M/s. Krishna Agencies (these are appellants 3 and 4 above) and whatever calcium carbide was sold by them was actually the suppressed production of M/s. Gulf Olefines. As against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts frequently. However, he submitted that the strongest defence averred by them concerns the question of consumption of electric energy which is also discussed at page-11 of the impugned order, wherein, it was submitted to the adjudicating authority that they could not have produced the said quantity of 1429.705 Tonnes, more than the recorded quantity, since the energy consumption varies from 3500 to 4500 KWH per Tonne. He further submitted that the Central Electro Chemical Research Institute had estimated that energy consumption for manufacture of calcium carbide in medium sized plant such as theirs would vary between 4100 to 4500 per MT. Secondly, a survey conducted by the department on neighbouring units also shows that the power consumption ranges between 4200 to 4500 KWH per MT. He submitted that the learned Commissioner had argued that the departmental survey for neighbouring units could not apply in their case, those were using a batch manufacturing process, whereas, the present appellant was using continuous process. the learned Collector had also held that while M/s. Gulf Olefines was using lime and not lime stone, therefore, their energy consumption would be lower by abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the power that they consumed as certified by TNEB clearly supports the recorded production and, therefore, there was no scope for any suppression of production or any clandestine removal. 9. The last argument submitted by the learned Advocate was in the form of additional evidence at this stage, wherein, he submitted that the department had since then applied Rule 173E to the unit of M/s. Gulf Olefines and during this exercise had come to the conclusion that this very plant needed electrical energy to the tune of 4100 to 4300 KWH per MT of calcium carbide produced. This itself totally defeats the allegation of clandestine removal. 10. With respect to the second allegation regarding inclusion of value of drums in the assessable value of the calcium carbide, learned Advocate submitted that the impugned order at page 20 errs in recording that the calcium carbide was not supplied by them in bulk in tankers. He argued that page 11 para 7.3 of show cause notice as well as page 15 para 13(i)(a) of the show cause notice clearly mentioned that calcium carbide was supplied both the tankers as well as in drums to DCW. 11. Learned Counsel s arguments for non-inclusion of the dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods. The rest of the goods which they purchased under agreement from the two agencies were clearly known to them as items of trading by the said agencies and not as manufacture of M/s. Gulf Olefines. Secondly, he pointed out that Rule 209A, under which penalty was levied, came into effect only on 14-4-1986 and therefore, for the majority part of the period it was not available to the learned Commissioner for imposing penalty on them. He cited the case of Triveni Rubber and Chemicals as reported in 1994 (73) E.L.T. 7 (S.C.) as well as also 1988 (34) E.L.T. 98 (Tribunal). He further argued that since there was no clandestine removal involved in the case of M/s. Gulf Olefines, therefore, no penalty under Rule 209A should be imposed on them. 15. Heard learned JDR, Mrs. Aruna Gupta, who reiterated the findings in the order-in-original. She pressed that therein it had been clearly held that the electrical energy consumption was only 2200 units per MT and, therefore, the charge of clandestine removal had great force. Particularly when it was read with the five inculpatory statements of their MD, Shri Rajaram, who had given a very belated retraction after nearly 1 year. 16. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as found energy consumption levels of appellants plant to be in the range of 4100 to 4300 KWH/MT. The department s reliance on some statements of Rajaram is drowned under the plethora of these evidences. 19. As regards the second issue of inclusion of value of drums is concerned, we find that this allegation also does not stand for the following reasons :- (i) there is no evidence to show that the two agencies are mere dummy; (ii) there is no evidence to show that M/s. DCW did not pay for the drums to these agencies; (iii) there is no evidence to show that appellant M/s. Gulf Olefines received these drums into their own stock accounts as their own property; (iv) therefore, the appellant s version that the drums are owned by DCW has to be accepted; (v) being so, it is well settled law that value of drums supplied by buyers is not includible in assessable value; (vi) that because the drums were owned by DCW, therefore, benefit of Notification 331/77-C.E. (sic) is available; (vii) even if it held that M/s. Gulf Olefines sold the drums to DCW, then this factor is not material to the issue, because even then the drums would be owned by DCW; and (viii) as against the ..... 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