(1.) By this appeal the appellants herein challenge the Order -in -Original No. 15/96 dated 31.10.96 passed by the Commissioner of Central Excise and Customs, Trichy, by which the Commissioner has demanded Central Excise duty of Rs. 23,04,994 under Rule 9(2) of the CE Rules, 1944 read with proviso to Section 11A(1) of the CE Act, 1944, besides imposing penalty of Rs. 23,04,994 on the appellants. There is a personal penalty of Rs. 40,000 on the Vice President of the appellants Company who is not in appeal before us.
(2.) Brief facts of the case are that the appellants are engaged in the manufacture of ordinary port -land cement falling under sub -heading 2502.29 of the CETA 1985. Verification of the stock and scrutiny of the records of appellants by the Central Excise officers revealed certain discrepancies relating to wrong availment of benefit of Notification No. 24/91. -CE dated 25.7.1991. According to the Department under this Notification benefit was allowable only for cement manufactured out of the clinkers produced in the same factory whereas it was found that the appellants had manufactured cement out of Clinker manufactured in their own factory using vertical shaft kiln as well a from Clinker purchased from M/s. Chettinadu Cements Corporation Ltd. During the period from 12/92 to 7/93 they had purchased 1159.940 MTs of Clinkers from outside and produced 1220.989 MTs of Cement and the inasmuch as cement produced was cleared at concessional rate, a differential duty of Rs. 1,68,191 was payable by the assessee -appellants. The records also revealed that oh 23.7.93 i.e. the date of visit of Central Excise Officers, Form IV had a balance of 1214.579 MTs of Clinker whereas the physical stock was only 123.500 MTs leaving a shortage of 1091.079 MTs of Clinker. By using 1091.504 MTs of Clinker the, assessee would have manufactured 1148.504 MTs of cement and would have removed the same clandestinely without payment of duty. There was also discrepancy in the account inasmuch as the Cement register showed clearance of 100 bags of cement to M/s. KAP Viswanathan Higher Secondary School on 10.7.93 whereas the GPI showed only sale of 50 bags of cement to the said party. It was also found that the assessee was maintaining private records and when it was compared with RGI Register there was a wide discrepancy and the quantum of cement thus produced and suppressed from the department worked out to 4402.45 MTs during the period 1989 -90 and 1990 -91 and the department worked out a duty of Rs. 8,93,396.53 on the alleged manufacture and clearance of cement. The appellants also maintained private record of daily receipt of Limestone from Mines for manufacture of Clinker and there was a wide variation in regard to the quantum shown in the Form IV with those shown in the private record. The records also revealed that the appellants had manufactured hollow blocks falling under sub -heading 6807, for construction of compound wall and cleared the same without payment of duty. It was found by the department that 27 blocks have been manufactured per bag of cement. Statements were recorded from various employees of the company including Vice Chairman of the Company. One Shri Rajadurai, Senior Supervisor, Production -cum -Maintenance in his statement dated 20.7.93 explained the ratio used of clinker used in the manufacture of cement, However, he could not explain the shortage of clinker noticed in the factory and so also, by Shri Ramachandran, Despatch Clerk. Shri Ravichandran, Accountant of Pudupalayam Mines of the assessee in his statement dated 15.9.93 admitted removal of lime stone from the mines to the factory as per the entries in the Daily Despatch Report. This statement was corroborated by the statement given by Shri Ambalavanan, Vice President. He further stated that there was difference in production figures between the production register and stoppage note and stated that he was ignorant of the excess removals to M/s. KAP Viswanathan Higher Secondary School. Proceedings were therefore drawn against the appellants by issue of show cause notice proposing to demand duty of Rs. 24,27,802.94 under Rule 9(2) read with proviso to Section 11A(1) of the CE Act, 1944, apart from imposing penalty on the company In terms of Section 11AC read with Rule 173Q, as also personal penalty on the Vice President of the Company, under Rule 173Q of the CE Rules, 1944. On consideration of the reply furnished by the appellants and after granting personal healing to the representative of the appellants, the impugned order was passed which Is challenged by the appellants on the following grounds:
(3.) Shri S. Venkatachalam, learned Counsel appearing for the appellants argued the matter on the above lines and submitted that the impugned order has been passed without any evidence and sought for dismissal of the appeal. As regards penalty, he vehemently argued that penalty is not imposable in this case and he cited the decision of the Tribunal in the case of Punjab Recorder Ltd. v. CCE 2002 (132) ELT41,