9911796707
TMI Blog1998 (3) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... e, seized. 3. On physical verification of the stock, the following discrepancies were found : S.No. Description of goods Recorded balance as per RG 1, RG 23 Pt. IA Stock physically found Finished Goods 1. Duplex Board 48.657 MT 33.877 MT Raw Materials 2. Feric Alum 30.250 MT 22.000 MT 3. Starch 6.000 MT 1.000 MT 4. Rosin 825.000 MT 700.000 Kgs 5. Caustic Soda 15.000 MT 13.000 MT 4. Further it was noticed that RG 1 register was written up to 12-2-1991; Form IV Register was written up to 31-12-1990 and RG 23A Part I was filled upto 4-2-1991. 5. Scrutiny of the Machine Log Books indicated that quantities of 7.3 MT and 8.4 MT of finished goods were produced on 12th February, 1991 and 13th February, 1991 respectively. On checking the entries of clearances, it was observed that entries were made only up to 11-2-1991 in RG 1 Register up to Gate Pass No. 368 dated 11-2-1991. A quantity of 6.1 MT was found to have been cleared on 13-2-1991 under the cover of GP 1 No. 369 dated 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders for the period 1-7-1990 to 9-8-1990. In respect of the duplex board cards incorporating production figures, he stated that the same were prepared by production staff, but that neither he had given any instruction to prepare such records nor he had any knowledge about these. 9. Shri Kailash, Shift Incharge of the unit, in his statement recorded on 12-3-1991, stated that production capacity of the machine installed in the unit is 15 tonnes per day; that the log books are prepared to give the owner first hand information of the happenings of the shifts/day; that as per directions of the Employer, details of production were entered in such log books after 31-1-1991; that the production details are recorded daily on production cards and sent to the office every day. 10. The Department also found a letter of PICKUP, sanctioning financial assistance for the project indicating that the installed capacity of the plant was 5000 MT per annum and thus, the average installed capacity was not less than 18 MT. A Show Cause Notice was issued to the Appellants asking them to explain as to why duty should not be demanded on 24.376 MT of Duplex Boards found short; 6.1 MT Duplex Boards clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereas the Logbook shows production on Sundays. 15. Non-accountal of production of 407.507 MT from 1-7-1990 to 10-8-1990 as worked out from electricity consumption register was explained by saying that Shri Raju Gupta, Electrician who maintained this register left the company on 11-8-1990; that the maximum capacity of the plant was 5000 MT per annum or 15.15 MT per day of 3 shifts; that the Show Cause Notice reflects production capacity of more than 15 MT per day; that there was no evidence placed on record by the Department that sufficient raw material was procured to manufacture this quantity of production. 16. Regarding production of 35.09 MT Duplex Boards, reflected by card-board pieces, it was contended that these production cards were not maintained under the orders of the management and that they did not contain the production figures as they did not mention the name of the factory or signature of any person. 17. Regarding excess production of 256.315 MT for the period up to March, 1990 and 3899.557 MT during 1990-1991, it was submitted that these figures have been arrived at by calculating the production on pro rata basis on the basis of power consumption and product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se figures were taken as the figures of production without any corroborative evidence; that the statements were retracted by an affidavit. 21. The ld. Counsel also submitted that merely because Form IV Register was filled up to 31-3-1990 it does not conclude that the Appellant had manufactured the finished product and had clandestinely removed the same over and above the RG 1 Register; that the appellants had explained that entries were being made in the Registers maintained by them. 22. On the question of calculating duplex board production based on power consumption, the ld. Counsel submitted that power consumption register relied upon was for the period 1-7-1990 to 10-8-1990; that while the figures recorded in the power consumption register have been accepted, the Statement of Shri Laxmi Kant Agarwal has been relied upon although the same has been retracted subsequently; that it was also argued by the Counsel for the Appellants that the demand of Rs. 22,67,723.81 has been forced on the appellants on the basis of electricity consumption whereas it is an admitted position that on the alleged meter reading Register, production figures are alleged to have been found only for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Having regard to the demand of duty on 73.631 MT Duplex Boards, we note that this figure is based on the production cards on 2-2-1991, 3-2-1991, 11-2-1991 and 13-2-1991. These figures are not independent, but tally with the figure shown in the machine log books. Since these figures are based on documents and no evidence has been produced as to what these figures were, simply saying that the log books and duplex board cards were not maintained under orders of the management, does not prove that the figures could not be relied upon. No alternative explanation has been given by the Appellants to prove that the figures in the log books and Duplex Board cards indicate not the production, but some other thing. In the absence of and proof produced by the Appellants, we uphold that these figures indicated production and since the goods were not removed with payment of duty, therefore, duty has been correctly demanded on them. 29. From the evidence placed before us in respect of 407.502 MT of Duplex Board, we note that this figure has been arrived at on the strength of Power Consumption Register which incorporated not only the daily power consumption details, but also the corresponding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the rate of 15 MT/day, the production for 39 days will be 585 MT. The production according to the Power Consumption Register during the 39 days comes to 562.792 which is less than the estimated production. Moreover, the installed capacity and production capacity of a plant may slightly vary. Production may sometimes be more and sometimes less. How this figure was in excess greatly on account of production capacity has not been explained by the Appellants. We, therefore, hold that duty on this account has been rightly demanded by the lower authorities. The impugned order confirming the demand of duty on the production not recorded in this regard is upheld. 30. A lot of emphasis was placed on installed capacity of the plant. Here we are not concerned with the installed capacity. We are concerned with the production capacity. Production capacity may be slightly more or slightly less than the installed capacity depending on a number of factors. That simply because the installed capacity of the plant was 15 MT, nothing has been brought on record that the production capacity was not more on certain days or during a certain period. 31. In regard to demand of duty on 43.800 MT of dup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is becomes a base for determining the normal production based on the number of units consumed for 1 MT of duplex boards. Under the Central Excise Rules, there is a provision for such determination. We also note that this determination is spread over 39 days which is sufficiently long time to be representative of the norm of production. We also note that the Director of the Appellant company has admitted that this Power Consumption Register was maintained under his orders. Looking to this aspect and also the fact that during these 39 days, the production was being recorded in the Power Consumption Register as also consumption of electricity date-wise and also the fact that during these days when machine log books were maintained invariably, the production recorded in the RG 1 Register was less than the production recorded in the Power Consumption Register and the machine log book, this was the regular pattern followed by the Appellants. In this view of the matter, we hold that on the basis of Power Consumption Register and the production, norm of production was correctly taken by the lower authorities to arrive at a normal recorded production of 256.315 MT of duplex Boards for the y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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