CARBON INDIA Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) These three appeals arise out of a common Order -in -Original No. 14/Commissioner/MP/2000, dated 4 -2 -2000 passed by the Commissioner, Central Excise confirming demand of Central Excise duty and imposing penalties on all the three appellants.

(2.) Shri Jitendra Singh, learned Advocate, submitted that M/s. Carbon India, a partnership firm, are engaged in the manufacture and trading of stationery, viz., Type Carbon Paper, Pencil Carbon Paper, Typewriter Ribbon, Sealing Wax, Ink Pad and Paper Pins; that the Revenue has alleged that they had suppressed production of excisable goods and removed the same clandestinely without payment of duty and that they created a dummy unit in the name of M/s. Rohit Enterprises, Appellant No. 2 with a view to avail undue exemption under Notification No. 175/86 -C.E., dated 1 -3 -1986; that the impugned order has been passed only on the basis of entry of sale in their Balance Sheet relating them as sales of the goods manufactured in their factory; that Shri Deepak Agarwal, partner, in his statement, has deposed that the difference in the figures of goods, removed as reflected in the Balance Sheet and R.T. 12s, was on account of trading of similar goods purchased by them from the market; that they had purchased these goods in compliance to fulfil their obligations against time bound supplies to various Government Departments; that these purchases were also reflected against sale in their annual Balance Sheet as detailed in the foot note as well as in the Annexure Form 3 C.D. attached to it; that the Appellant No. 1 could not support these contentions with the Bills or other documents as the same had been burnt and lost in the fire accident in their office on 20 -4 -1990. The learned Advocate contended that the Revenue also does not have any evidence with them to show that the Appellant No. 1 had not traded in similar goods, besides manufacturing; that it is settled law that clearance of the excisable goods from the factory cannot be arrived on the basis of Balance Sheet - Kanam Foam Industries, 1993 (68) E.L.T. 368 (Tribunal). He also submitted that it is settled law that the declaration of quantity of goods, manufactured and removed to other Government Departments, should not be the sole basis for concluding clandestine manufacture and removal of excisable goods that something more is required to establish the fact of clandestine removal; that, therefore, the Commissioner has erred in concluding the Sales Tax Returns as corroborative evidence for the sale amount of the Balance Sheet to establish clandestine removal; that the Revenue had no positive direct affirmative evidence to substantiate clandestine manufacture and removal of goods by them beyond declared in R.T. 12 returns.

(3.) The learned Advocate, further, mentioned that sealing lac sticks were purchased by them from M/s. Prakash and Co. which is evident from the sale Bill No. 1, dated 1 -10 -1989 and Sale Bill No. 2, dated 2 -11 -1989; He also referred to Form 'C' of Central Sales Tax which reflects sale of sticks to M/s. Dilip Enterprises (Page 68 of Paper Book). He also contended that the sealing wax or sticks are classifiable under Heading 13.01 of the Schedule to the Central Excise Tariff Act for which Tariff rate of duty is nil; that, therefore, the question of demanding any duty in respect of sealing wax does not arise; that the presumption of the Adjudicating Authority that the trading amount reflects the value of the carbon paper is neither proper nor legal in the absence of any evidence. He also referred to the decision dated 14 -7 -1999 of Trade Tax Tribunal, Bench -2, Kanpur wherein it has been observed that the evidence maintained by the Excise Department shows that in the year of assessment, work of manufacturing remained totally closed from 1 -1 -1990 to 31 -3 -1990 and the supply of Rs. 20,951.96 only. The Department of Electricity and Certificates of National Small Scale Industries Corporation Ltd. also prove the closing of production. The learned Advocate also submitted that M/s. Rohit Enterprises are having its independent entity having Central Excise Licence No. 41 Ch. 48/Range XI/89; their Central Excise records were periodically scrutinized; holding provisional SSI registration from the Directorate of Industries and had applied for a registration from the Trade Tax Department. He contended that their annual capacity cannot be determined on the basis of production for the month of November, 1989 in absence of any norms fixed by the Department under Rule 173E of the Central Excise Rules, 1944; that the production for the month of October was shown in the month of November.