Decided on October 07,1991



S. Kalyanam, Member (J) - (1.) THIS appeal is against the order of the Additional Collector of Central Excise, Cochin, dated 8 -11 -1989 levying a duty of Rs. 37,140.89 and a total penalty of Rs. 2,500 on the appellant.
(2.) PROCEEDINGS were instituted against the appellant by issue of a show cause notice dated 31 -7 -1989 inter alia alleging that the appellant had manufactured and cleared 1686 kgs. of rubber latex foam mattresses, pillows and cushion falling under sub -heading 9494.00 of the Central Excise Tariff Act, 1985 without payment of duty, without issue of gatepasses and without following the Central Excise formalities. It was further alleged that the statutory records were not properly maintained and production was suppressed and there was an excess quantity of goods such as bus seats, car seats, cycle seats, etc. falling under Tariff Item 4016.11 in a quantity of 1566.500 kgs. Besides this there was excess quantity of 6065.500 kgs. of latex foam sponge pieces coming under sub -heading 4004.00 and 2300.000 kgs; of Trimmings of latex foam sponge and overflow waste falling under Central Excise Tariff sub -heading 4004.00. The proceedings eventually culminated in the present impugned order.
(3.) SHRI Santhanam and Shri M.S. Krishnan, the learned counsels for the appellant, at the outset submitted that so far as manufacture of mattresses falling under sub -heading 9404.00 and bus seats, car seats, scooter seats, etc. falling under sub -heading 4016.11 of the Central Excise Tariff are concerned, there is no duty difference and both items are chargeable to the same rate of duty and the Department found shortage in respect of mattresses falling under sub -heading 9404.00 and simultaneously found excess also of the goods such as bus seats, etc. covered by Tariff Heading 4016.11. It was submitted that the mattresses are always not perfect and in respect of certain imperfections some quantity used to be rejected and out of the trimmings bus seats and scooter seats would be manufactured by the appellant and there being no difference in duty liability in respect of the mattresses and bus seats etc. there could not possibly be any motive or purpose on the part of the appellant to suppress the production of mattresses. The Department, therefore, in the above circumstances should have correlated and set off shortage in mattresses with the excess in goods like bus seats, scooter seats, etc. and this has not been done properly. If this exercise is done, the difference would come about 119.500 kgs. of shortage. The learned counsel further contended that so far as the excess in latex foam sponge and trimmings of latex foam sponge are concerned, the Department has only levied a fine of Rs. 10,000 and the learned counsel submitted that the stock got accumulated for a long time and there can be no suppression attributable to the appellant. The learned counsel further submitted that even though the difference in duty is sought to be worked out from February, 1988 to January, 1989 nothing specific has been stated as to how the period has been worked out. It was, therefore, submitted that the impugned order is not sustainable in law more particularly when the basis on which the quantum of duty worked out is not clearly indicated in the order and the shortage is not set off against the excess. Shri Gregory, the learned SDR, submitted that even by giving a set -off of the shortage in mattresses towards excess in bus seats and scooter seats, etc. there would still be a difference of about 119.500 kgs. and, therefore, the plea of the appellant that bus seats and scooter seats have been manufactured out of imperfect or waste or trimmings in the mattresses cannot be accepted. The learned SDR further submitted that even if the same is accepted, the appellant would be liable to pay duty on about 120 kgs. of shortage and the duty amount would be quite substantial. Regarding the latex foam sponge pieces and trimmings of latex foam sponge the learned SDR contended that they are excisable goods and the appellant has not accounted for the excess and, therefore, the case of the Department that they would be liable to confiscation under law cannot be assailed since proper entries were not made in the statutory registers.;

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