RUBICON Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) Petitioner firm is a small scale industrial unit engaged in the manufacture of tread rubber. As a small scale unit, they claim exemption from payment of duty under the Central Excises and Salt Act, 1944 (the Act, for brevity) under notifications issued by the Central Government from time to time.

(2.) On 9-8-1984, the first respondent issued notice alleging that the petitioner's factory was kept under surveillance, and subsequently inspected by the Superintendent of Central Excise on 13/14-2-1984, which resulted in seizure of incriminating documents and the recording of a statement from Balan, the foreman of the factory. The documents seized and the statement recorded from Balan disclosed that the production in the factory far exceeded the limit of exemption under the notifications of the Central Government during the three years, 1981-82, 1982-83 and 1983-84. On the basis of these disclosures the Superintendent of Central Excise, Angamaly Range directed the petitioner, on 16 2-1984 to take out licence under R.173 of the Central Excise Rules (the Rules.) This was followed by the seizure on 17-2-1984 of 694.500 kilograms of tread rubber "illegally" produced by the petitioner. A statement was recorded from Balan on that day also. The department collected further materials and recorded statements from various other persons, and issued the notice to show cause on 9-8-1984 alleging that the petitioner had suppressed production of tread rubber and clandestinely removed the goods and that they were guilty of contravention of various provisions of the Act and Rules. The petitioner had manufactured and cleared without payment of duty a total quantity of 229984.500 kilograms of tread rubber of a value of Rs 5932 815-30 during the period 1-4-1981 to 132-1984. By suppressing the manufacture, the petitioner had evaded taking out of the prescribed licence and payment of duty due. The petitioner was therefore, required to show cause why duty of Rs. 21,80,309.59, as also penalty should not be levied on them.

(3.) The petitioner objected to the proposal with contentions, which did not find acceptance with the first respondent. He passed an order of adjudication on 20-11-1986 the details of which are unnecessary for the present purpose. The petitioner challenged the order in appeal before the second respondent, namely the Appellate Tribunal, under S.35B of the Act. The Tribunal set aide the order on the ground that it had been passed in violation of the principles of natural justice. The matter was remitted to the first respondent for reconsideration of the issues after affording the petitioner an opportunity to cross examine the witnesses mentioned in the list furnished by them, and to pass fresh order in accordance with law.