P.C. Jain, Member (T) -
(1.) SINCE all the matters arise out of a common order -in -original, a single order is being passed.
(2.) BRIEF facts of the case as given in the appeal memo filed by the Department are as follows : -
2.1 In pursuance of an information that M/s. Aluminium Industries Ltd., the first respondent herein, cleared dutiable Aluminium Rods and Wires as scrap without payment of Central Excise duty leviable thereon, Anti -Evasion Wing of DRI intercepted the consignments of bare aluminium cable (rope type), bare aluminium wire bundle and aluminium rods consigned to M/s. Laxmi Metal Mart (second respondent herein), Bombay on 22nd and 23rd February, 1983 in the premises of M/s Dharmendra Wire Industries. On demand the second respondent produced the original gate -passes Nos. 170, 451, 452 and 171 all dated 21 -1 -1993 of the first respondent herein for 20,000 M.Ts of so -called aluminium rod scrap and electric wires and cable scrap alongwith the relevant challans of the first respondent, way bill, consignment note of Economic Transport Organisation etc. The officers found on examination of those goods that these were not hammered or cut into small pieces or pressed so as to make them as entangled mass and unfit to be used as electric cables or wires. The length of bare aluminium cable was from 3 feet to 10 feet. The bare aluminium wires were all in bundled forms, machine wound up having gauges 8 to 10 SWG, weighing 50 to 60 Kgs. and segments of wire in the bundles were of l0mtrs. to 60 mtrs. or more in length. The aluminium rods in bundled form were found to have been tied together or single, some in straight condition, or slightly bent condition.
2.2 The above goods were cleared from the factory of the first respondent as scrap under cover of the aforesaid G.Pls citing Notification Nos. 32/81 dated 1 -3 -1981 and 33/81 dated 1 -3 -1981 without payment of Central Excise duty leviable thereon. The Officers of the Anti Evasion Wing were of the view that the aforesaid goods were not scrap or waste. Four representative samples were also drawn by the said officers. They seized the goods in the reasonable belief that they were cleared without payment of duty.
2.3 The adjudicating officer held the goods as not being scrap or waste. The said authority also observed that the goods were not scrap at the time of clearance as they were not rendered unfit for marketing and could be used as aluminium wire rod in the condition in which they were cleared. Accordingly, he ordered confiscation of the goods valued at Rs. 3,47,000 under Rule 173 -Q of the Central Excise Rules with an option to the owner of the goods to redeem them on payment of a fine of Rs. 50,000. He also imposed a penalty of Rs. 20,000 on the first respondent and warned the second respondent to be careful in future inasmuch as they were the bonafide purchaser of the goods from the first respondent.
2.4 The respondents herein thereafter filed the appeals to the Collector of Central Excise (Appeals), Calcutta who accepted their pleas that the goods were waste and scrap. Hence these appeals by the department.
(3.) THE learned D.R. Shri M.S. Arora, arguing for the appellant -Collector has reiterated the findings of the original adjudicating authority, namely, the Deputy Collector of Central Excise. He has urged that the goods were capable of being used as per their normal use either as aluminium rods or as wires and cables. The length of the aluminium wires vary from 10 mtrs. to 60 mtrs. These could, therefore, be put to useful electric purposes. He has submitted that it is immaterial for the purpose of excise duty whether the goods are sub -standard or whether they do not conform to ISI standard. In support of this proposition, the learned D.R. has relied upon the following citations : -
(1) 1987 (30) E.L.T. 771 (TISCO v. Collector of Central Excise, Patna);
(2) Tribunal's Order No. 129/90 (Para 6) dt. 27 -7 -1990 (Prabhu Steel Ltd. v. Collector of Central Excise);
(3) 1988 (37) E.L.T. 155 (Punjab National Fertilizers and Chemicals Ltd. v. Collector of Central Excise).
He has further submitted that the benefit of Rule 49 under which duty can be waived, if the goods are not fit for marketing, can be invoked only in case of non -marketable goods which are unfit for consumption. In the instant case, in the face of the finding of the adjudicating authority the goods are marketable and were actually marketed. In these circumstances, the benefit of Rule 49 of the Central Excise Rules, cannot be extended. He has further submitted that the benefit of Notification No. 32/81 or 33/81 can only be extended if the respondents prove that they are entitled to the said notifications, the burden is on them to prove their eligibility to the said notifications. That burden has not been discharged.
3.1 Rebutting the contentions of the learned D.R. Shri K.K. Banerjee, learned advocate for the first respondent i.e. M/s Aluminium Industries Ltd. has urged that the first respondent is a manufacturer of high tension ACSR cables. These are still cores with the cables and their lengths according to the ISI standard vary from 1.2 KM to 1.5 KM. In view of such an ISI standard, the goods are clearly waste and scrap so far as the 1st respondent is concerned. The goods cannot even be called sub -standard as the department like to call them. Cables are without the steel cores. He has also pointed out that all these goods were cleared as scrap under the physical supervision of the Range Officers. In view of the clearance of the goods as waste and scrap by the departmental officers themselves extending to them the benefit of Notification Nos. 32/81 and 33/81 both dated 1 -3 -1981 the department cannot go back on the clearance and seize the goods and make an unwarranted case out of such seizure. If any hammering or cutting of the goods was to be done, according to some instructions of the department (although such instructions were never cited by the adjudicating authority), the department ought to have undertaken that exercise. The goods having been cleared by the departmental officers themselves, it is unfair on the part of another agency of the organisation to question the action of the other departmental officers. He has further submitted that these goods were duly mentioned in the classification list approved by the competent authority. In the facts and circumstances of this case, the learned advocate has submitted that the impugned order is correct in law and the appeals should be dismissed.
3.2 Arguing for the second respondent, Shri Gopal Prasad, learned consultant, has reiterated the points made by Shri Banerjee that the clearance was made under the supervision of the Central Excise Officers and the certificate of such clearance was duly placed on record. He has also pointed out that except for the opinion of the adjudicating authority that the goods "can be used as cables and wires for electrical purposes" no expert opinion or trade opinion has been brought on record regarding the utility of those goods as wires and cables or for the purpose for which they are meant. He submits that it is a well settled position of law that the views of the adjudicating authority cannot take the place of evidence inasmuch as they cannot be cross -examined by the other side. In support of this proposition, he relies on 1986 (25) E.L.T. 145 - Paras 13 to 15 (Koisam Kumar Singh v. State of Manipur). He has also stated that it is well -known that the current through a conductor through its surface passes. Therefore, any defect on the surface such as spills, splits, slags including diemarks, scratches, fittings, blow holes, projections, chipping of aluminium etc. would make the aluminium unfit for manufacturing cables and, therefore, they are rejected. The adjudicating authority has not examined the goods and has not considered whether the goods carried those surface defects, as mentioned above before imposing his own view regarding utility and marketability of the goods. He, therefore, submits that department's finding that the goods are marketable is without any evidence at all and cannot be sustained. He has also made a legal point that the goods were cleared in accordance with Rules under the supervision of the Range Central Excise Officers. In these circumstances, the provision for confiscation under Rule 173 -Q does not apply because there has been no contravention of Rules.
We have carefully considered the pleas advanced on both sides. We are impressed by the plea of the respondents' counsels that the adjudicating authority in coming to the finding that the goods are marketable and can be used as wires or cables or as aluminium rods normally for the purpose for which they are meant is based on no evidence except the adjudicating authority's own opinion. Reliance placed by the learned consultant, Shri Gopal Prasad on Supreme Court's judgment in K.K. Singh's case, mentioned supra is well placed. Paras 13 to 15 in that connection are reproduced below : -
"13. Lastly, the learned Sessions Judge relied on the local inspection made by him. Here, the High Court rightly pointed out that the learned Sessions Judge had committed a serious error of law. Normally, a Court is not entitled to make a local inspection and even if such an inspection is made, it can never take the place of evidence or proof but is really meant for appreciating the position at the spot. The Sessions Judge seems to have converted himself into a witness in order to draw full support to the defence case by what he may have seen.
14. This Court in Pritam Singh and Anr. v. State of Punjab - A.I.R. S.C. 415 observed thus : - 'A Magistrate is certainly not entitled to allow his view or observation to take the place of evidence because such view or observation of his cannot be tested by cross -examination and the accused would certainly not be in a position to furnish any explanation in regard to the same'.
15. We are satisfied that in the instant case the learned Sessions Judge has exceeded his jurisdiction in making a local inspection." ;