KUSHANA RUBBER WORKS Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) THESE are two applications for dispensing with the pre-deposit of a demand for duty on tread rubber of Rs. 2,06,479.20 raised against the applicants under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A of the Central Excises & Salt Act 1944, and the imposition of penalty of Rs. 25,000/- on the applicant firm and a penalty of Rs. 10,000/- on applicant N.K. Razack who is the Managing Partner of the firm under Rule 9 (2), 52A (5), 226 and 173 Q of the Central Excise Rules, 1944, ordered by the Collector of Central Excise, Cochin, in his adjudication order dated 29.12.1987. As the appeals themselves are to be taken up today on a short point of law, the pre-deposit of the duty and penalty is dispensed with and the appeals themselves are taken up for disposal today.

(2.) A. Nos. E/283/88 & E/284/88.�The facts which give rise to the appeals are that the appellant firm manufactures tread rubber. On 27.10.1986, the Central Excise Officers of Palghat seized in transit 10 rolls of tread rubber weighing 288 Kgs. from a mini lorry on the ground that the accompanying Gate Pass for the goods covered only 8 rolls. They thereafter visited the appellant's tread rubber factory and seized 14 rolls of tread rubber found in the factory for the reason that the goods were not accounted for in the statutory R.G. 1 account. The total quantity seized was 698 Kgs. of tread rubber which was provisionally released during the adjudication proceedings. A statement was given by the Foreman of the factory Shri P.M. Bawa on 29.10.1986 saying that he was responsible for-the manufacture of tread rubber in the factory. He further went on to say that on 27.10.1986 on the day of the seizure he had given a statement that 3 kgs. of raw rubber along with other raw materials was the formula for obtaining an output of 15 kgs. of tread rubber mix. This formula, he said, was incorrect and gave out another formula stating among other raw materials 6 kgs. of raw rubber would be required for producing 50 kgs. of tread rubber. He added that he was giving the above correction as directed by the appellant Razack, Managing Partner of the firm. Shri Razack in a statement following the seizure given on 28.10.1986 admitted that they have transported tread rubber in a lorry on 27.10.1986 without payment of duty. The Department thereafter examined the documents seized from the appellant's factory and came to the conclusion that there was material to show that the appellants had regularly been manufacturing and clearing tread rubber without payment of duty mostly to another firm in Guntur in Andhra Pradesh whose proprietor was a close relation of the Foreman Shri Bawa. It is in these circumstances following further investigations proceedings were instituted against the appellants which resulted in the impugned order of the Collector against which the present appeals have been filed.

(3.) SHRI K.M. Vadiveiu, the learned D.R., contended that the Foreman Bawa in his statement in which he corrected the production formula had clearly indicated that he was doing so as per the direction of the appellant Razack the Managing Director. Therefore, the later statement of Razack was in the nature of an after-thought as has rightly been found by the Collector and therefore to be discarded. Further, reasonable opportunity, including that of cross-examination of the mahazar witnesses and two departmental officers, has already been given to the appellants and the evasion of duty by the appellants is amply proved by the evidence on record.