AGARWAL BROTHERS STEEL ROLLING MILLS Vs. COLLECTOR OF CENTRAL EXCISE
LAWS(CE)-1986-7-5
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on July 30,1986

Appellant
VERSUS
Respondents

JUDGEMENT

S. Kalyanam, Member (J) - (1.)SHRI S.K. Srinivasan, the Liaison Officer of the appellant-company appearing on behalf of the appellant-company submitted that out of the total tax of Rs. 57,358.71, the appellant has already deposited a sum of Rs. 28,679.36. In respect of the balance, it was urged that the appellant unit is a small scale industry and finished products worth about Rs. 63,000/- is already in the custody of the Central Excise Department and the industry itself remained closed for the past two years. Since the appeal itself is posted today and since 50 per cent of the duty has already been deposited, in the circumstances, we dispense with the prior deposit of the duty amount pending disposal of the appeal today.
This appeal is directed against the Order of Collector of Central Excise (Appeals), Madras, dated 11-1-1985 confirming the order of the Assistant Collector of Central Excise, Bangalore dated 27-8-1984 raising a demand on the appellant for a sum of Rs. 57,358.71 as duty amount due in respect of the appellant's clearances effected between June 1980 to August 1982 for the manufacture of excisable goods such as re-rolled iron and steel products. The short question that arises for our consideration in the appeal is whether the demand made on the appellant by the Department 'by invoking the extended period of limitation in terms of Section 11A(1) of the Central Excises and Salt Act, 1944 is tenable in law and whether there are materials available on record to indicate that the appellant is guilty of suppression of certain facts within the meaning of Section 11A(1) so as to clothe the Department with the right to invoke the extended period of limitation. The original authority as well as the lower appellate authority have held that the appellant has suppressed particulars with reference to raw materials, such as runners and risers which have been admittedly used by the appellant in the manufacture'- of re-rolled iron and steel products. The case of the Department is that the appellant has cleared re-rolled iron and steel products without payment of any duty claiming the benefits of exemption in terms of Notification No. 206/63-CE dated 30-11-1963 (as amended). It is a common ground that runners and risers are items which are excluded from the purview of exemption notification referred to supra and it is also not disputed by the appellant that they used the runners and risers as raw materials in the manufacture of finished products, namely., re-rolled iron and steel goods.

(2.)Shri Srinivasan contended that the Department knew that the appellant was using runners and risers as raw materials in the manufacture of finished goods, namely, re-rolled iron and steel products and this fact is evidenced by the raw materials register. It was urged that the raw materials register (Form IV) has also been signed by the Central Excise authorities on 1-5-1981 and the same has also been scrutinised by the audit authorities of the Central Excise Department, as evidenced by the audit report of the Central Excise Department dated 16-2-1982. It was therefore contended that since the Department knew well that the appellant was using runners and risers as raw materials and did not levy any duty or raise any demand within the statutory period of limitation, the claim now made by the Department and confirmed under the impugned order is clearly barred by limitation in terms of Section 11A of the Act.
Shri K.M. Vadivelu, the learned Departmental Representative contended that in terms of Rule 173D, the appellant ought to have furnished the principal raw materials used in the manufacture of finished products and since the same was not furnished, the appellant is guilty of suppression of facts entitling the Department to invoke the extended period of limitation under Section 11A(1) of the Act. The learned Departmental Representative further urged that the normal practice is to give particulars of raw materials used in the manufacture of finished products in the classification list filed by the manufacturers and in the instant case, the learned Departmental Representative urged that the raw materials, such as runners and risers are conspicuous by their absence in the classification list clearly evidencing suppression on the part of the appellant. The learned DR further urged that the raw materials register is a general register and does not bear any evidence that the same was scrutinised by the concerned authorities of the Central Excise Department and the signature of a Central Excise Officer on 1-5-1981 at the opening of the raw materials account and the scrutiny of the same by the officers of the Central Excise Audit later as well as the report of the audit parties dated 16-2-1982, would not be sufficient circumstances to impute knowledge to the Department of the petitioner's manufacturing activity with reference to runners and risers.

(3.)WE have carefully considered the submissions of the parties herein. WE have gone through the raw materials register and it bears clear evidence to show that the runners and risers were two of the raw materials alongwith other raw materials used by the appellant in the manufacture of goods. WE also find the raw materials register signed by an officer of the Central Excise Department on 1-5-1981 and 14-12-1981. The report of the Audit Officer dated 16-2-1982 also clearly indicates that the Central Excise authorities knew about the nature of raw materials used by the appellant in the manufacture of finished products. The reasoning of the lower appellate authority that the entry of the raw materials in the raw materials register in Form IV would not amount to a statutory requirement which is required to be met by the appellant while filing a classification list does not appear to us to be correct. The classification list does not contain any columns for incorporating particulars with reference to the use of raw materials. The plea of the learned Departmental Representative that Rule 17 3D was not conformed to by the appellant is also incorrect in the facts and circumstances of this case. Rule 173D reads as follows:-
Rule 173D. Assessee to furnish information regarding principal raw material ;-

(1) Where the assessee is a manufacturer, he shall, if so, required by the Collector, furnish to the Assistant Collector of Central Excise, in respect of each of the excisable goods manufactured or to be manufactured by him, information regarding the principal raw material and the quantity of such materials required for manufacture of unit quantity of such excisable goods.

(2) If the assessee intends to make any alteration in the information furnished under Sub-rule (i), he shall likewise furnish fresh information to Assistant Collector.

WE would like to note that a statutory obligation on the manufacturer, like an appellant to furnish information regarding principal raw materials used by him is cast only in a situation where the appellant is required by the Collector to furnish such information to the Assistant Collector of Central Excise. The learned DR after verification from the local Central Excise Collectorate informed us that no such requirement is normally made by the Collectors in terms of Rule 173D either by Trade Notice or otherwise. The learned DR merely emphasised the normal practice to incorporate the raw material particulars in the classification list particularly when the manufaturer claims the benefits of an exemption notification. Therefore, on consideration of the entire evidence on record, we find that the fact that the appellant was using runners and risers as raw materials were in the knowledge of the Department as indicated above and in such a situation, the reasoning of the authorities that the appellant is guilty of suppression of facts within the meaning of Section 11A(1) of the Act so as to clothe the Department with the right to invoke the extended period of limitation is not legally tenable. In this view of the matter, we set aside the impuged order appealed against and allow the appeal.



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