9911796707
TMI Blog1997 (12) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants by the officers of the Central Excise on 26-2-1990 and further enquiries made by the Department a Show Cause Notice (SCN) was issued to the appellants by the Collector on 31-1-1992. The Department alleged that during the years 1988-89 and 1989-90 appellants had manufactured Audio Magnetic Tapes (AMT) and removed a certain quantity of AMT without payment of Central Excise Duty payable thereon and without accountal in the statutory records. SCN alleged that during 1988-89 appellants had manufactured and removed without accountal and without payment of duty on 15,98,638.850 Sq. Metres of AMT which attracted excise duty (B.E.D. + S.E.D.) amounting to Rs. 35,24,990/- and during the year 1989-90 they had manufactured and removed without payment of duty on 16,04,643.856 Sq. metres of AMT attracting excise duty of Rs. 35,38,240/- (B.E.D. + S.E.D.) adding to a total duty demand of Rs. 70,63,238/-. 4. In reply to the SCN appellants by letter dated 8-2-1992 demanded inspection of relied upon documents and submitted a detailed defence reply on 3-9-1992. During the personal hearing before the Collector appellants contended that there were arithmetical errors and mistakes in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Entry would yield different areas of standard output. In support of their contention they submitted a chart. As per the formula prepared by the appellants the total area of pan cakes that should have been manufactured out of the total number of polyester film rolls shown in Column 5 in Form IV of the Register was 1,83,47,890.61. Similarly, the total area in Sq. metres of pan cakes that could have been manufactured based on the aforesaid standard output during the period from 1989-90 was 2,03,23,017.29 Sq. metres. The total area of pan cakes of actual production was shown in the RG-I register for the years 1988-89 and 1989-90 on the said basis. Thus total quantity of production as per the RG-I Register as per the aforesaid calculation was 1,83,02,434.1963 sq. metres for 1988-89, and 2,03,10,401.7723 sq. metres for the year 1989-90. Therefore, after comparing the figures shown in the charts as per the calculations explained by the appellants, the difference would be only 45,456.12 sq. metres in respect of the year 1988-89 between the RG-I figures and the total area of pancakes that could have been manufactured out of the film rolls consumed during the said period. Similarly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s given, according to the appellants, the difference if at all, would be very small. This difference was very negligible as the same can be attributed to rounding off of the decimals. Appellants, therefore, contended that there was no difference between the total area of the pancakes that could have been manufactured from the film rolls, issued as per Form IV Register and the area of the total number of pancakes that was shown as manufactured in the RG-I Register. 6. After considering the submissions made by the present appellants the Collector came to the following conclusions : As regards the contention of the appellants that there was a calculation mistake in the working out of the demand and that no allowance for wastage has been given, the Collector observed that as per entries in Form IV Register, column 3 showed the receipt of the raw material, i.e., the polyester film, column 5 showed the quantity of film used for the finished product, column 9 showed wastages and column 11 showed the quantity of the final product, namely, AMT, that had been manufactured. The Collector noted that the polyester film in roll form received by the appellants were of different lengths, namel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btained as output whereas as per the standard output claimed by the appellants the same roll of 5,200 metres would produce only 54 metres into 80 cuts leaving 4.17 x 5 cuts as wastage. This could not be accepted particularly when the appellants were also producing AMT with leader. Leader tape is usually inserted between two cuts to get continuity of pancakes. Further, wastage of around 10% shown in column 9 of Form IV Register had also been taken into account in the SCN. Besides, Form IV Register maintained by the appellants is meant for recording the receipt of raw materials and, their consumption apart from final products obtained as well as the wastage during production. Collector observed that from a perusal of Form IV Register maintained by the Appellants it was clear that the appellants were regularly showing wastage lengthwise which come to between 10% and 12% as declared to the Department. This apart, since the appellants were also producing pancakes both with and without leader, their claim that pancakes of smallar cuts were to be declared as waste could not be accepted as for pancakes with leader, running length of cuts is required whereas for obtaining pancakes without l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o production in April, 1988, the standard output per roll was given as equal to 160 pancakes of 27 cuts each and what is shown in RG-I Register is the total number of pancakes manufactured. While column 11 of Form IV Register shows the total quantity of pancakes with a particular number of cuts, the quantity shown in RG-I Register is of the same variety of pancakes but of different number of cuts. Thus, the quantity of pancakes shown in Form IV Register would tally with the total number of pancakes shown in RG-I Register only if each type of pancakes is of the same cuts. However, if the total number of pancakes of a particular type shown in Form IV Register is converted into the same type of pancakes with the same number of cuts as that of the pancakes shown in the RG-I Register, the number of pancakes shown in column 11 of Form IV Register would tally with the number of pancakes as shown in RG-I Register. While issuing the SCN the Department had proceeded on the basis that 80 pancakes would be slit widthwise with .0381 metres as width of each pancake. The entire length of the film roll was taken as the length of the pancakes. According to the ld. Counsel for the appellants the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is based on the entries shown in the- Appellant s Form IV Register (raw material account) and RG-I Register. Though the investigation started with the surprise visit of the officers to the appellant s factory on 26-2-1990 the SCN was issued only on 31-3-1992 and the period to which the charges relate were the years 1988-89 and 1989-90. It is seen that the SCN has referred to Form IV Register, RG-I Register and RT-12 returns of the relevant period apart from the statements of the Commercial Manager of the Appellant for alleging suppression/misdeclaration and for invoking the extended period of limitation. According to the ld. Counsel for the appellants, the Department has not taken full account of the further explanation given by the Commercial Manager regarding the standard output formula. This had been further explained by the appellants in their reply to the SCN and during the proceedings before the Additional Commissioner. Arguing the point of limitation the ld. Counsel for the appellant had argued that it was apparent from the SCN that for the allegation of suppression of facts the Department had relied entirely on the Form IV Register and the RG-I Register and the RT-5 Retu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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