TaxTMI 
TaxTMI 
2001 (5) TMI 105
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.... that order Revenue as well as the appellants came in appeal to the Tribunal and the Tribunal vide their order dated 23-6-1995, remanded the matter to the Original Authority for re-consideration of the issue afresh. (As per the case reported at C.C.E. Cochin v. Devi Rubber Products, 1996 (83) E.L.T. 630). Consequently the proceedings were taken up by the Commissioner, who vide his order dated 30-9-1997, impugned before us, held that the computation of production was correctly shown and after taking into account the accounted production, found a clandestine clearance of 455.66 tonnes of tread rubber from November, 1983 to December, 1986 had taken place. Thus he found there was an evasion of duty to the extent of Rs. 57,41,330.80. He confirmed the same under the proviso of Section 11A of the Central Excise Act. He also imposed a penalty of Rs. 5,00,000/- on Shri Rajappan proprietor under Rule 173Q and ordered the confiscation of land, building, plant and machinery of the manufacturer and ordered the redemption of the same on a fine of Rs. 2,00,000/-. He also imposed penalties of Rs. 25,000/- each on the manager, the foreman and the clerk under Rule 173Q. The present appeal has been f....
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....d rubber from the appellants. He came to the conclusion that only a small quantity was accounted and did not accept the defence put up that the statements have been recorded under threat for reasons already recorded. (b) The learned Commissioner also concluded about the production as in the show-cause notice from the sulphur consumed. These findings as recorded in Para 12 of the order are........ "However, it has not been possible to exactly compute the actual production on the basis of the statements and other circumstances. Therefore the SCN has computed the production on the basis of ordinary sulphur consumed. Shri G. Ramachandran Nair, the Foreman of the company has stated that 110 gms of ordinary sulphur is required for manufacture of 25 kg. of tread rubber. The company has claimed that the total sulphur for every 25 kg. of tread rubber was 375 gms. Shri Ravindran has stated that 265 gms. of crystex sulphur and 110 gms. of ordinary sulphur is required for 25 kg. of tread rubber. Therefore, I do not find any infirmity in working out the total production on the basis of the formula that 110 gms. of ordinary sulphur is required for ....
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....nbsp; The learned advocate while stressing the point of non-consideration of the formula, submitted for the consumption, of two kinds of sulphur being used have submitted the following points for consideration : A. A mere perusal of the impugned order of the Commissioner would reveal that he has mechanically proceeded to confirm the demand in the show cause notice without adverting to the merits of the allegations in the show cause notice. The impugned order confirms the demand on the basis of three types of evidence - (a) The statements of staff regarding production capacity and non-accountal of raw materials, (b) The statements of buyers regarding quantity of tread rubber purchased by them and (c) Details contained in certain invoices which were seized from the premises of raw material suppliers. While each of these types of evidence do not, individually or collectively, support a finding of clandestine removal, the estimation of clearances is done based on the consumption figures of one raw material - ordinary suplhur - as stated in the formula given by Ramachandran Nair. While dealing with each category of evi....
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....for the appellant unit. Moreover, the statements have to be read in the light of the circumstances under which they were given and they have not been corroborated by independent evidence of any kind. The statements of buyers regarding quantity of tread rubber purchased by them Reliance is placed by the Commissioner on the statements of Sri.T.M. John (Prakash Tyres, Mavelikkara), R. Gopinathan (Gopan Tyres, Nangiarkulangara) and S.Dileep (Accountant, Devi Tyres, Haripad) - all purchasers of tread rubber from the appellant. While in these statements, the witnesses state that they have been receiving tread rubber from the appellant unit at an average rate of 500 kgs., 500 kgs. and 1000 kgs. per month respectively, these persons have, during cross examination deposed that the figures were given based on the directions issued by the Central Excise Officers. They have also deposed that the average rate of procurement of tread rubber from the appellants was 150 kgs., 275 kgs., and 750 kgs. respectively per month. The inference regarding non-accountal of finished goods in the production records is based solely on the strength of the initial statements extracted from the aforementione....
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....; Reliance is placed on 12 invoices of Universal Agencies, Kottayam, who are the consignment stockists for Carbon & Chemicals Ltd. The invoices describe the consignee as Rajappan, Ettumanoor, Ravindran Sons, Mavelikkara; Excel Rubber, Tiruvalla, Ravindran, Changanassery, Ravindran, Kottayam, Ramachandran, Mavelikkara; etc. The Commissioner relies on the similarity in the names of the consignees to those of persons working in the appellant unit, to infer that these were sales to the appellant unit. The appellant has categorically denied that it has any relationship with the persons described in the aforementioned invoices. While these statements do not conclusively point to any clandestine removal, the Commissioner has accepted the aforementioned evidence, without independent corroboration, to sustain a finding of clandestine removal. It is trite that, suspicion cannot take the place of proof and hence the demand against the appellant unit cannot be sustained. (See : 1978 (2) E.L.T. (J 172) (S.C.); 1983 (12) E.L.T. 161 (S.C) ; 1995 (76) E.L.T. 631 (Tri.) ....
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....uivalent to 0.355 Kgs. of Sulphur for a mix of 25 Kgs. of Tread Rubber. The letter also states that the consumption of Sulphur would be more if the Sulphur used was insoluble Sulphur. The letter from the Rubber Research Institute of the Government of India ought to have been relied on by the Commissioner. It is trite that reports of Government authorities cannot be lightly brushed aside by the adjudicating authorities (See : Reliance Cellulose Products v. C.C.E. - 1997 (93) E.L.T. 646 (S.C.). E. The Commissioner also does not take into account the quantity of Sulphur used in the manufacture of Cushion Gum and Under Thread Strips which are also produced at the appellant's unit. The estimation done by the Commissioner proceeds on the basis that Sulphur is used only in the manufacture of Tread Rubber. F. The imposition of a penalty on the appellant unit and its employees was wholly unjustified. The impugned order does not specifically refer to acts or omissions which form the basis for the imposition of a penalty. At any rate, the penalty imposed is wholly dis-proportionate to the off....
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.... Rule 173E, which by its very reading would indicate that any shortfall in reported production from such 'norms' fixed would call for an explanation from the assessee & duty liability would arise if shortfalls are not satisfactorily explained for any prospective period. The provision of Rule 173E, cannot be invoked to determine to fix & apply 'norms' for any retrospective period to determine, the excesses if any. We rely on 2000 (124) E.L.T. 821 (Paras 12, 13). The decision therefore to our mind does not help the case of the Department. This ruling of the Supreme Court would be applicable and binding to fix a 'norm' under Rule 173E only. (f) Once we find that the Supreme Court's decision, relied by the learned DR is not applicable, we would be bound by the decisions relied upon by the learned Advocate for the appellants in the case of the very same commodity viz 'TREAD RUBBER' in the case of Calicut Rubber v. C.C.E. Cochin - 1996 (81) E.L.T. 320 (Tribunal) = 1996 (64) ECR 444 (T) & other cases of Clandestine production and clearance where it has been held that only one raw material factor alone is not sufficient to determine excess....