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TMI Blog1983 (10) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... ector upheld the order of the Assistant Collector, Central Excise, Kottayam, dated 1-12-1978, confirming the Notice of Demand having been issued by the Range Officer on 13-9-1974. The Appellate Collector, no doubt, gave relief to the party in so far as the questions of rate of duty as well as the method of computation and the total quantity to be subjected to excise duty were concerned, and directed that the Assistant Collector re-examine those questions, and arrive at the correct amount of short levy, which the appellants were liable to pay. But the appellants remained aggrieved by decision on the principal point of excisability as such, and also on account of the fact that their view as to the demand being barred by time did not find favour with the lower authorities. 3. The facts giving rise to the controversy in these proceedings are that by means of Notice of Demand, issued on 13-9-1974, demand for excise duty was raised in respect to the products, which the appellants describe as cushion compound , cleared from their factory for the purpose of manufacture of cushion-backed tread rubber during the period 1-4-1968 to 13-10-1972. The position taken by the Excise authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any clandestine removal, and there had been no violation on their part of the provisions of Rule 9(1), as according to them, if at all this product known as cushion compound was leviable to excise duty, it was a case short levy within the meaning of rule 10 of the Rules, which provide a period of only one year, for raising such demand, and as such the notice having been issued long after the expiry of the period of one year from the time when the duty was allegedly payable; the whole of the demand raised by means of this notice was unenforceable. 6. The rate at which the assessable value was worked out and the quantity held dutiable were also challenged, on two counts; firstly, that the departmental authorities were acting erroneously in applying a flat rate irrespective of the period to which the demand relates, and further by applying the rate prevalent in 1974 although the demand covered the period between 1968 to 1972, and that the quantum of duty so determined, as per work sheet attached on the basis of the rate prevailing in 1974, was not sustainable. And that secondly, the quantity of the cushion compound had also not been appropriately worked out, and they have not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cking and cushion compound , were separately available in the market which indicated that they were retreading material and could be obtained independently and used for retreading and resoling. The plea that cushion compound used within the factory for backing of tread rubber was not liable to excise duty was thus rejected, holding that duty on that quantity of cushion compound which was used for backing of tread rubber was payable irrespective of the fact that the other product had paid duty at the time of final removal. He further hold that the fact of issuance of Notification No. 208/C.E., dated 14-10-1972, exempting this commodity known as cushion compound from duty, was indicative of the fact that prior to that these were dutiable goods, and since the notification was not made retrospective, for the period prior to this notification, such cushion compound was chargeable to excise duty. 10. He also held it to be a case where clearance of this product known as cushion compound had been effected without discharge of duty liability and in contravention of provisions of rule 9(1) of the Rules, and so rule 9(2) was fully applicable and since there was no time limit for raising de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leas as to the notice being barred by time was also repeated as also the contention that payment of duty on cushion compound when it was used for backing tread rubber and again when tread rubber with cushion backing was cleared would amount to double duty which was not envisaged, inasmuch as the rate of duty and classification of both the goods was under the same Tariff Item namely, 16A(2). Reference was again made to the identical case pertaining to M/s. Enfit Rubber Factory, Changanacherry decided by the Appellate Collector of Central Excise, Madras on 15-4-1975, holding that cushion compound if used within the same factory in the manufacture of cushion backed tread rubber falling under the same Tariff Item, namely, 16A(2) will not attract any levy of Central Excise duty, and pleaded that the view taken by the lower authorities in their case amounted to discrimination. 12. Repeating their submission that duty was not payable on this item known as cushion compound manufactured and used within the factory for tread rubber and also the plea of the time bar, it was added that even assuming that the amount payable; the only provision applicable was that of Rule 10 of the Rules, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and also maintaining R.G. 1 Stock Register, which clearly indicated that the party was manufacturing cushion compound and its user within the factory was also indicated in the relevant columns as against the product which was cleared from the factory as cushion gum , explaining that the two commodities were same although in market it was given the nomenclature of cushion gum having been out into specified shapes and sizes, whereas cushion compound in factory was used for backing tread rubber, in the same form, in which it was produced. He thus emphasised that factum of manufacture was never concealed nor that of user in the facatory, and that the Excise authorities could always have an idea from a perusal of the Stock Registers, which were duly checked, as also the RT 12 Returns, that there was some quantity of cushion compound being manufactured in the factory, and was being captively consumed. 15. He contended, secondly, that even Rule 9(2) prescribed a period of five years assuming it to be a case of clandestine removal whereas the demand was confirmed, for the first time in this case by means of Assistant Collector s order dated 1-12-1978 whereas the period to which it rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as: excisable commodity , and urged, on the basis thereof that his case was certainly better, than that of the Ceekay Rubber Industries case inasmuch as here the appellants had even indicated to the Excise authorities, that they were manufacturing excisable goods. 18. While arguing on the applicability of Rule 9(2), he raised another argument to the effect that Rule 9(1) contemplates commodity wise schedule with the result that one type of goods should have been cleared for the manufacture of some different commodity, and not to such cases as existed in this case, where both cushion compound and tread rubber with cushion backing were commodities of the same nature, falling under the same Tariff Item, and that there could not be any double incidence of duty under the same Tariff. 19. The learned Counsel assailed the applicability of Rule 9(1) from another angle; namely, that after the introduction of self-removal procedure followed by self-assessment, Rule 9(1) was not strictly applicable and there could be no prepayment of duty, and that Rule 173J had reference to Rules 10 and 11, and not to Rule 9(1). 20. He concluded by urging that although the amendment introduced by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... captively consumed, whether considered dutiable or non-dutiable , had been revealed. There has been thus no assessment of duty, nor any presentation of the goods for such assessment within the meaning of Rule 9(1) and it was thus a clear case to attract Rule 9(2). He distinguished the cases cited by the learned Counsel particularly N.B. Sanjana (supra), as well as Murugan Company (supra) and emphasised that in both the cases, the party had shown the manufacture as well as clearance of goods indicating that in their opinion they were liable to nil duty , which fact the Excise authorities at that time had acquiesced in, and it was in that context, that it was held that there was no suppression of facts. He also made reference to one case decided by the Delhi High Court and reported as 1981 (8) E.L.T. 97 = 1982 ECR 334 D (Gopal Papers Board Mills v. Union of India Others) holding that where there is no statement in the excise records, or by issue of a gate pass, the case would be covered by Rule 9(2) or even by Rule 10A and that if the goods were removed without gate passes and without making any proper entries in their records, it amounts to no statement , with regard to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove referred case, as well as in the earlier appeal pertaining to Goodwin Rubber Works falling in the same jurisdiction, where the appellants factory is situated. It is further pertinent to note that the High Court of Kerala has also decided against the assessees on this point in a Writ Petiton, having been filed by four factories, in the same area, and appellants factory being situated within the jurisdiction of Kerala High Court, they are also bound by the said judgment, although the learned Counsel was not in a position to say positively whether they were one of the parties in the writ petition or not. 25. The only question now falling for our adjudication in this appeal is that of issue of time bar. We have given our earnest thought to this matter in view of the wide range of points covered by the learned Counsel in this respect, and the tenacity with which he pressed them. We, however, find ourselves unable to uphold any of the contentions. We feel that learned Counsel s contention that the present case is distinguishable from the facts of Ceekay Rubber Industries in this respect seems to be misconceived because there also it was found that the fact of manufacture of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise authorities for the purpose of assessment is the classification list, or the fact of clearances can be collected from gate passes. It is a matter for almost judicial notice that Stock Register or RT 12 Returns would be inspected by officers of lower rank in the Range and not by the competent authority; namely, Assistant Collector who is to apply his mind to the question of assessment of duty on the classification list. Otherwise also, the records which were shown were for the period ending with 1967 and it cannot certainly be urged that the Excise Officers would be expected to carry with them the knowledge from previous records and it is certainly not open to the appellants to urge that from this fact inference could be drawn by the concerned Excise Officers, of such user. 27. We also do not find it possible to uphold the contention that it was a case of mere short levy inasmuch as out of total quantity of cushion compound manufactured in the factory, some of which; namely, the one marketed as cushion gum was subjected to excise duty, and the remaining quantity which was consumed in the factory was left out. It is thus not a case, where goods were offered for assessment w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and being made, and not the demand itself, in terms of Rule 9(2). It is not disputed that at the time this notice of 13-9-1974 was issued, there was no restriction as to the period within which demand under Rule 9(2) could be made. In any case, proceedings having been initiated, before the period allowed to the Department was restricted to five years, the subsequent amendment would not curtail the period of limitation in this case as held by the Tribunal in the case of M/s. Anna Aluminium Co. v. Collector of Central Excise, Cochin [1983 ECR 1137-D (CEGAT)] holding that in the absence of any indication that the amendment brought about with effect from 6-8-1977 was to operate retrospectively, the provisions of the rules, as they existed before the said amendment, as to the period available to the Department, would operate for this particular case. 30. As a result of the foregoing discussions, we do not find it possible to uphold the contention that the demand could not be raised with reference to Rule 9(2) or was otherwise barred by time. The appeal is accordingly liable to be dismissed. The party has already been given relief by the Appellate Collector as to the quantum of duty to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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