9911796707
TMI Blog2001 (5) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal and the Tribunal vide their order dated 23-6-1995, remanded the matter to the Original Authority for re-consideration of the issue afresh. (As per the case reported at C.C.E. Cochin v. Devi Rubber Products, 1996 (83) E.L.T. 630). Consequently the proceedings were taken up by the Commissioner, who vide his order dated 30-9-1997, impugned before us, held that the computation of production was correctly shown and after taking into account the accounted production, found a clandestine clearance of 455.66 tonnes of tread rubber from November, 1983 to December, 1986 had taken place. Thus he found there was an evasion of duty to the extent of Rs. 57,41,330.80. He confirmed the same under the proviso of Section 11A of the Central Excise Act. He also imposed a penalty of Rs. 5,00,000/- on Shri Rajappan proprietor under Rule 173Q and ordered the confiscation of land, building, plant and machinery of the manufacturer and ordered the redemption of the same on a fine of Rs. 2,00,000/-. He also imposed penalties of Rs. 25,000/- each on the manager, the foreman and the clerk under Rule 173Q. The present appeal has been filed by the proprietor against this order. 2.The matter was heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t accept the defence put up that the statements have been recorded under threat for reasons already recorded. (b) The learned Commissioner also concluded about the production as in the show-cause notice from the sulphur consumed. These findings as recorded in Para 12 of the order are........ "However, it has not been possible to exactly compute the actual production on the basis of the statements and other circumstances. Therefore the SCN has computed the production on the basis of ordinary sulphur consumed. Shri G. Ramachandran Nair, the Foreman of the company has stated that 110 gms of ordinary sulphur is required for manufacture of 25 kg. of tread rubber. The company has claimed that the total sulphur for every 25 kg. of tread rubber was 375 gms. Shri Ravindran has stated that 265 gms. of crystex sulphur and 110 gms. of ordinary sulphur is required for 25 kg. of tread rubber. Therefore, I do not find any infirmity in working out the total production on the basis of the formula that 110 gms. of ordinary sulphur is required for 25 kg. of tread rubber. If there was information about the total quantity of crystex sulphur consumed during the relevant period, the total prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have submitted the following points for consideration : A. A mere perusal of the impugned order of the Commissioner would reveal that he has mechanically proceeded to confirm the demand in the show cause notice without adverting to the merits of the allegations in the show cause notice. The impugned order confirms the demand on the basis of three types of evidence - (a) The statements of staff regarding production capacity and non-accountal of raw materials, (b) The statements of buyers regarding quantity of tread rubber purchased by them and (c) Details contained in certain invoices which were seized from the premises of raw material suppliers. While each of these types of evidence do not, individually or collectively, support a finding of clandestine removal, the estimation of clearances is done based on the consumption figures of one raw material - ordinary suplhur - as stated in the formula given by Ramachandran Nair. While dealing with each category of evidence, the Commissioner does not appreciate the facts which discredit the evidence relied on by the Department. The statements can, at best, raise a suspicion in the minds of the authorities but they do not conclusiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regarding quantity of tread rubber purchased by them Reliance is placed by the Commissioner on the statements of Sri.T.M. John (Prakash Tyres, Mavelikkara), R. Gopinathan (Gopan Tyres, Nangiarkulangara) and S.Dileep (Accountant, Devi Tyres, Haripad) - all purchasers of tread rubber from the appellant. While in these statements, the witnesses state that they have been receiving tread rubber from the appellant unit at an average rate of 500 kgs., 500 kgs. and 1000 kgs. per month respectively, these persons have, during cross examination deposed that the figures were given based on the directions issued by the Central Excise Officers. They have also deposed that the average rate of procurement of tread rubber from the appellants was 150 kgs., 275 kgs., and 750 kgs. respectively per month. The inference regarding non-accountal of finished goods in the production records is based solely on the strength of the initial statements extracted from the aforementioned persons. The only corroboration to this evidence, which is attempted in the show cause notice, and later in the impugned order, is the reliance on certain alleged discrepancies in some invoices collected from suppliers of raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner relies on the similarity in the names of the consignees to those of persons working in the appellant unit, to infer that these were sales to the appellant unit. The appellant has categorically denied that it has any relationship with the persons described in the aforementioned invoices. While these statements do not conclusively point to any clandestine removal, the Commissioner has accepted the aforementioned evidence, without independent corroboration, to sustain a finding of clandestine removal. It is trite that, suspicion cannot take the place of proof and hence the demand against the appellant unit cannot be sustained. (See : 1978 (2) E.L.T. (J 172) (S.C.); 1983 (12) E.L.T. 161 (S.C) ; 1995 (76) E.L.T. 631 (Tri.) B. The estimation of the extent of alleged clandestine removals effected by the appellant unit is done by calculating the consumption of one raw material - Ordinary Sulphur. It is pertinent to note that in the manufacture of Tread Rubber, Sulphur is not the main ingredient. The main ingredients are Raw Rubber and Carbon Black. The consumption details of both these raw material have not been gone into by the Department. It is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o account the quantity of Sulphur used in the manufacture of Cushion Gum and Under Thread Strips which are also produced at the appellant's unit. The estimation done by the Commissioner proceeds on the basis that Sulphur is used only in the manufacture of Tread Rubber. F. The imposition of a penalty on the appellant unit and its employees was wholly unjustified. The impugned order does not specifically refer to acts or omissions which form the basis for the imposition of a penalty. At any rate, the penalty imposed is wholly dis-proportionate to the offence alleged to have been committed by the appellant unit and its employees. (d) The learned DR for the Revenue has reiterated the findings of the Commissioner and relied upon the decision in the case of Triveni Rubber Products 1994 (73) E.L.T. 7 (S.C.) to submit that the plea of the appellants regarding the reliance of only the consumption of sulphur needs no consideration in light of this decision as Supreme Court in this case had found : "7. "On a reading of the Rule we cannot agree that the officer empowered by the Collector or the Collector cannot determine the normal production unless all the factors mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion, relied by the learned DR is not applicable, we would be bound by the decisions relied upon by the learned Advocate for the appellants in the case of the very same commodity viz 'TREAD RUBBER' in the case of Calicut Rubber v. C.C.E. Cochin - 1996 (81) E.L.T. 320 (Tribunal) = 1996 (64) ECR 444 (T) other cases of Clandestine production and clearance where it has been held that only one raw material factor alone is not sufficient to determine excess production. (Pure Enterprises (P) Ltd., 1999 (111) E.L.T. 407, 1997 (93) E.L.T. 177 Others) would entitle in this case, the benefit of doubt to go to the appellants as held in V.K. Thompy 1994 (69) E.L.T. 300 (T). (In this case use of one item of raw material viz Tread Rubber was not found to be supported by combined evidence of other products). To come to a finding that determination of the excess production, based on a single new material as per the formula viz Sulphur of only one kind, we find, does not enthuse us to uphold the findings of the Commissioner. (g) We find that the Commissioner, in Para 12 of the impugned Order (extracted supra) begins to record the findings regarding the excess production with the sentenc ..... 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