M.P. AGRO (INDIA) INDUSTRIES Vs. CCE

JUDGEMENT

(1.) The above captioned appeals have been filed by the Appellants against a common impugned Order -in -Original dated 20.10.2001 vide which the Commissioner had confirmed the duty demand of Rs. 52,25,447 with equal amount of penalty for the period, August 1997 to August 1999 against appellant Company and imposed penalties against the other Appellants as detailed therein.

(2.) The manufacturing premises of the Appellants No. 1 was visited on 19.3.99 by the Central Excise Officers. On checking of the stock of their finished excisable products as well as inputs used by them in the manufacture of finished products, excess stock of 3899,8 kgs of HDPE fabric, 37739 cement bags and 1550 kgs of wastage was detected and seized. On scrutiny of RG -1 and RG -23A Part I register, it was observed by the Officers that the production shown by the Appellants and recorded in the RG -1 register did not commensurate with and proportionate to the inputs/raw materials issued and that they had shown less production as against issuance of higher quantity of inputs. They had suppressed the actual production and removal of the same without payment of duty. The Officers recovered an inter office memo dated 23.1.99 issued by Shri Naveen Khandelwal, Chairman of the Appellants Company addressed to Shri Sunil Mehta, General Manager (Works) wherein he congratulated Shri Sunil Mehta and his staff for achieving the target of 16 lakhs bags per month. From that letter it was clear that this much bags were manufactured prior to 23.1.99 but the production shown in the RG -1 register was much less than that. The statements of Shri S. Venketa Giri, Excise Officer, Shri Umesh Singh, Assistant Production Manager, Shri Sunil Mehta and Shri Naveen Khandelwal, Chairman were recorded. But they could not explain about the abovesaid inter office memo regarding production of 16 lakhs bags. On completion of the enquiry, a show cause notice was issued to the Appellants proposing confirmation of duty and imposition of penalties. They, however, contested the correctness of the notice by alleging that they were manufacturing HDPE/PP Fertiliser/Cement Bags and Fabrics and they were liable to duty at the rate on 16% as their products were covered under Chapter 39 of CETA. They also alleged that the raw materials used in the manufacture of final products were HDPE, PP, LDPE, LLDPE Granula, Master Batch and PP Lamination Granuais. They denied the allegation of clandestine removal of the goods. They also alleged that the weighment was not properly done for the fertilizer/cement bags. The handling loss of the raw materials was not accounted for and the process loss was not taken into account by the Department while calculating the demand. They also claimed deduction of the thinner in the calculation of the duty. They, further, averred that subtraction of 7636 kgs of seized excisable goods, while calculating the duty had not been done and submitted on Chart of Production from August 1997 to August 2001 and claimed that the difference was only of 45024.54 kgs which according to them was due to handling/process loss. The Adjudicating Authority, however, did not accept the version of the appellants and pass the impugned Order.

(3.) The learned Advocate for the Appellants has reiterated in his arguments the above referred grounds which the Appellants had taken in reply to the show cause notice. According to him, if weighment of bags had been properly done and handling and process losses were taken into account and allowance of quantity of thiner and all the seized goods, was given, no duty would become payable by the appellants, He has also referred to the Chart of Production which was produced before the Adjudicating Authority, to further contend that there had been no suppression of production of final products by the appellants.