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TMI Blog2002 (8) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... 173Q and 209 ibid; (d) Penalty should not be imposed under Rules 173Q, 209 and 226 ibid. for contravention of the rules mentioned in para 20 of the Notice; and (e) They were required to produce the provisionally released goods before the adjudicating authority failing which they were asked to show cause as to why :- (i) the Bond executed should not be enforced; (ii) the Bank Guarantee should not be appropriated to the Government of India. The Notice was also issued to M/s. Deccan Enterprises (hereinafter referred to as DE), Plot No. B/58 and 60, APIE, Balanagar, Hyderabad asking them to show cause why :- (a) the differential Central Excise Duty of Rs. 10,34,619/- alleged to have been short-paid should not be paid by them under Rule 9(2) ibid read with proviso to sub-section (1) of Section 11A of the Central Excises and Salt Act, 1944; and (b) a penalty under Rules 9(2) and 173Q ibid should not be imposed on them. 2. DIPPL contended :- (a) The Unit was established in 1989 and got registered with the Central Excise Department in 1992 and they never crossed the basic exemption limit of Rs. 20/30 lakhs. (b) Regarding the non-accountal of 12,200 Kgs. of Rubber Compound Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y gave the example of Charminar brand which awarded only to a specific product to a manufacturer. Regarding yellow paint markings they explained that they revised the date as per the requirement of the Customers. (f) Reliance on the word 'Deccan' found on the gunny bags as circumstantial evidence is not called for as due to shortage of HDPE bags a few second-hand gunny bags were brought from the market. It was the practice of their company to purchase duly branded bags and the supplier might have wrongly branded as 'Deccan Enterprises' and hence, the word 'Enterprises' was blackened by them and such bags might be 15-20 in number. 3. DE made, inter alia, the following submissions :- (a) There was no suppression as the goods were sold and removed under proper excise gate pass, Delivery Challans and Invoices. Also that the returns were duly submitted to the department and assessments were also completed. As such, no duty could be demanded. (b) Their Company had stopped manufacture of those products during 1986 itself and thereafter started manufacturing Grooved Rubber Sole Plates. (c) The Company was having the rubber rings manufactured to individual drawings and specificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Enterprises, S/Shri Ramakrishna, Venkateswarulu, Misra and Jalan under the relevant Rules for the contraventions specified in Paras 24 to 29 of the said Show Cause Notice. (b) The Commissioner after considering the explanation of DE as regards the demand of duty of Rs. 10,34,619 slapped on DIPL on certain rubber rings and pads alleged to have been cleared by sale to one Shri Abrar Ahmed of Patancheru at ridiculously lower prices. The Commissioner considered the plea of sale on scrap and thereafter getting the verifications done from the Range and the RG 1 registers and verifying the entries with certain invoices concluded that the sales to Shri Abrar Ahmed were from the old stock and there is every possibility of the sale to be made as scrap and not of rings and pads. He conceded that the RT 12 returns of DE were assessed without raising objections. He observed "It is ordinarily expected of a prudent Central Excise Officer to probe into the case where the values declared in the Invoices and the assessment documents are ridiculously low". And thereafter, concluded that in absence of any question of RT-12s filed and absence of any efforts made by the investigating officers t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a simple daily account register as per Hyderabad Collectorate Trade Notices. He also rejected the alternate arguments that the said rubber sheets did not reach the RG-1 stage inasmuch as the same were yet to be packed since RG-1 registers has a column for goods packed and in loose conditions and the RG-1 stage not been reached in as much as the goods could not be marketed without packing. It is not a valid argument since undoubtedly the goods were in a finished form not a loose condition and should have been accounted in the appropriate column of the Proforma prescribed by the Trade Notices of the Hyderabad Collectorate. Since they have failed to do so, the goods were liable for confiscation under Rule 173Q(1)(a). However, finding that no specific sub-clause mentioned in this Show Cause Notice, the contravention in this case would be of provision of Rules 53 and 226 of the Central Excise Rules and therefore the said rubber sheets would be liable for confiscation not only under clause (b) of sub-rule (1) of Rule 173Q but also under Rule 226 and since they were provisionally released and not produced before him the Bank Guarantee could be enforced. (d) As regards the proposal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals are filed by M/s. DIPPL and the Revenue against this order :- (a) DIPPL have taken the grounds (Appeal No. E/317/97) (i) Being a declarant SSI Unit they were not obliged to keep statutory records, they are therefore not liable for penalty under Rule 226 read with Rule 173Q. (ii) No offence was established as regards 12,200 Kgs of Rubber sheets by not entering them in RGs, since these goods did not reach that stage, as Quality Control Checks and Packing was required. They were meant for export and have been eventually exported. (iii) As regards Stearic acid purchased vide Bill dated 15-4-95, was not entered in Stock Register which was updated to 30-3-95 only and this bill shown was not considered. In any case, non-entry in their private record does not call for penalty. (b) Revenue has taken the grounds (Appeal Nos. E/1908/97 and E/840/01) :- (I) M/s. Deccan Industrial Products Pvt Ltd : On examination of charges dropped by ld. Commissioner, it appears that the Commissioner had failed to appreciate and evaluate the material evidences on record to prove that the 68,345 No. of rubber rings were not manufactured at the factory of DIPPL. A few of them are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) The ld. Commissioner's finding at Para 19 of Page 17 to the effect that the onus is on the department to prove that raw materials issued in the past were fully utilized appears to be bad in law as the initial burden that excess stocks over and above book balance was appropriately discharged by department and the burden shifted to the assessee, while such is the "shift of burden" to the assessee, the ld. Commissioner unwillingly confirmed the position of "shifting of burden" by accepting the Bill No. S/003/95, dated 15-4-95 in respect of "stearic acid", and by confirming the charge partially. Dropping of charge on erroneous contention of "shift of burden" needs review. And prayed (II) M/s. Deccan Enterprises Pvt Ltd. : On examination of the above finding of ld. Commissioner, the following facts appear to have not been considered at all by ld. Commissioner resulting in arbitrary and erroneous decision. (i) M/s. DE, had been a Central Excise licensee for sufficiently long period and all the Central Excise statutory compliances were supposed to be in their knowledge. While clearing the goods at abnormally low prices terming the finished excisable products as nothing but scrap, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept the above. Quite contrary to the above statement, the sub-ledger of sundry debtors of Deccan Enterprises Pvt. Ltd., for the month of Jan '95 shows a debit balance of Rs. 7,014.56 confirming the extending of credit facility to Mr. Abrar Ahmed as a favoured buyer. These two contradictory facts abundantly make it clear that Mr. Abrar Ahmed was non-existent entity, a frontal agency to carry out the designs of M/s. DE and DIPPL, when such were the facts, investigation even if carried out by the investigating officers would have been a futile exercise and groping in the dark. Hence, the ld. Commissioner's finding fault on this count also appears erroneous. (v) The contention of ld. Commissioner that "there was no evidence to prove that it was not a scrap" appears to be bad in law, as such an evidence is not required to be proved by department in view of the fact there had been abundant availability of positive evidence that the goods are finished goods accounted for in statutory accounts. Mere long storage of goods does not turn them into non-commercial goods, eventually terming them as "scrap". Even if admitted for argument sake, the burden of proof squarely rests with the person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declarant unit there was no need to maintain records in the prescribed new material proforma, etc., under Rule 226, therefore liability arrived at under Rule 226, violation, is not upheld and is set aside. In view of the same, liability under Rules 173Q and 226 not being upheld, the fines and penalties imposed are set aside and appeal is to be allowed. (b) Appeal Nos. E/840/01 and E/1908/97 filed by Revenue. We find :- (i) The Department filed an appeal with the Tribunal on 20-8-97 against the aforesaid order mentioned above viz., O-in-O No. 62/96, dated 6-11-96. In the said appeal the Department prayed as mentioned below :- "In view of the foregoing, the Hon'ble Tribunal is prayed for the correct determination of the following points arising out of the said order :- (a) Whether, after taking into consideration the facts stated above read with facts given in the show cause notice, the said order of the Commissioner is legally correct and proper order :- (b) Whether by an order passed under Section 35C of the Act, the Tribunal should set aside the order passed by the Commissioner and should confirm the demand of the Central Excise Duty in full as mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had requested that a modification application along with Condonation of Delay petition and affidavit was called for to include M/s. DE, in the Appeal No. E/1908/97 filed against M/s. DIPPL. However, the CEGAT, vide Misc. Order No. 59/2002 in Appeal No. E/COD/202/01, E/840/2001, dated, 7-2-2002 has stated that :- "Shri Thomas appearing for the Revenue submitted that main appeal No. 1908/97 against the same impugned order has been filed in time. In view of this position, he requested to condone the delay in filing the supplementary appeal. Considered. Delay is condoned and matter is linked with 1908/97 and posted together on 21-2-2002. Registry is directed to issue notice." (iii) As regards demand of duty of Rs. 10,34,619/-, it is evident from the records, the rings were admittedly manufactured for meeting the specific requirements of various customers, the major customer being M/s. Hyderabad Industries Ltd. whose Vice President, Shri R. Khemka was the estranged brother of the DE's Managing Director. The findings of the Adjudicator on this demand as extracted in Para 4(b) herein, leads us to conclude that lacunae in investigation, cannot be filled by interpretation, or argume ..... 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