ABBA RUBBERS Vs. COMMISSIONER OF CENTRAL EXCISE, COCHIN

JUDGEMENT

(1.) BOTH the assessee and the Revenue are aggrieved with the impugned Order -in -Appeal No. 54/2003, dated 12 -2 -2003 passed by Commissioner (Appeals), Cochin. The appellants were charged with clandestine removal of 61728 Kgs of Tread -rubber and pre -cured tread rubber clandestinely without payment of duty of Rs. 5,58,700/ -. There was also an allegation that 7794.15 Kgs of pre -cured tread rubber and repairable strips of pre -cured tread rubber was found at the premises of the appellant in excess of production accounted in RG I Register kept with an intention to remove it without payment of duty of Rs. 75,260/ - which has been demanded. There is another allegation that the amount of Rs. 2,09,462/ - should not be demanded being the duty on 21696 Kgs of tread rubber or pre -cured rubber that had been manufactured and cleared clandestinely without payment of duty as per the shortage in physical stock of raw materials with respect of Form IV register. The Commissioner after due examination dropped the demand of Rs. 3,22,025/ - as there was no evidence available. He confirmed confiscation and imposed redemption fine of Rs 10,000/ -. He has also confirmed demand of Rs 1,50,548/ - without payment of duty as evidenced by the shortage of raw materials. There is a penalty of Rs. 1,50,548/ - under Section 11AC with regard to the demand confirmed and further penalty of Rs. 10,000 under Rule 173Q. The assessee is challenging the confirmation of demand of Rs. 1,50,548/ - and like sum as penalty under Section 11AC. The revenue is challenging the dropping of demands of Rs. 3,22,025/ -.

(2.) WE have heard both sides, learned Counsel submits that the dropping of demands was on a very clear cut findings. In para 6 of the impugned order, the Commissioner has noted that for manufacture of the main item, the assessee has to procure besides sulphur, the main ingredient i.e. raw rubber. The same was not found short or having excess raw materials in the books. The Commissioner has clearly accepted the assessees plea that there was no purchase of other required materials and there was also no excess electricity consumption and dropped the proceedings. He prayed for confirmation of this order by dismissing the Revenue appeal. He says the same finding should have been applied with regard to the allegation of confirmation of demand of Rs. 1,50,548/ -. On the allegation of shortage of raw materials, he pointed out that there was excess production. The finding recorded by the Commissioner himself in para 7 that for the manufacture of tread rubber and pre -cured tread rubber involve combination of various other raw material in the correct proportion. The revenue has not taken into account these factors including the absence of excess electricity consumption factor and use of carbon black for production of goods. He has also noted that the sulphur is not the main ingredient, the main ingredient is the raw rubber and carbon black. Having held so, he should not have confirmed the duty demand of Rs. 1,50,548/ - solely on the basis of the entries which have not been made in the statutory registers. With regard to the excess found, the explanation given was that the pre -cured tread rubber and repairable strips had been received as replacement and that had been sufficiently explained by production of documents which should have been accepted. He submits that the penalty of Rs. 10,000/ - under Rule 173Q is also not leviable. He relied on the ruling rendered by this Tribunal in large number of similar cases booked against rubber industries. He referred to the latest Order rendered in the case of Devi Rubber Products and Others v CCE, Cochin [2001 (135) E.L.T. 797 (Tri. - Bang) = 2001 (45) RLT 1023] wherein the Tribunal has clearly held that the allegation of clandestine removal cannot be upheld on sole basis of consumption of one raw material i.e. sulphur. He submitted that raw rubber is a controlled commodity and cess is leviable on it. The same cannot be purchased clandestinely as it is not available in the open market. Therefore the allegation of clandestine removal is not sustainable in the light of the judgment cited and also in the absence of excess electricity consumption. Learned SDR defended the order on the basis of the findings recorded by the Commissioner. He also prayed for allowing the Revenue appeal.

(3.) ON a careful consideration, we notice that the Commissioner has himself dropped the proceedings with regard to the demand of Rs. 3,22,025/ - holding that mere consumption of sulphur is not sufficient ground to confirm the charge of clandestine removal. He has clearly held that for manufacture of pre -cured rubber, the assessee has to purchase raw rubber and carbon black. The revenue has not produced evidence of its procurement, and no evidence regarding the sale of goods clandestinely to purchasers has been brought forth, the higher electricity consumption has also not been found. Therefore the finding recorded by the Commissioner for dropping the demand is a correct order. There is no merit in the Revenue appeal and the same is rejected. The finding recorded by the Commissioner on this point should have been applied with regard to the confirmation of demand of Rs. 1,50,548/ - which pertain to excess produced tread rubber and strips which were found in the premises. The appellants had clearly explained with evidence that this material had come for replacement and evidence had been produced.