2003 PLP (Trib (PTD)

Imran Tariq, D.R and Zawar Hussain, D.S. for Respondent. Date of hearing: 5th March, 2002. ZAFAR‑UL‑MAJEED, MEMBER (TECHNICAL).‑‑‑This appeal has been filed by Messrs Diamond Paper Mills, Multan against Central Excise Order‑in‑Original No.7‑MN/2000, dated 31‑7‑2000 passed by the Collector (Adjudication), Faisalabad.

2. The relevant facts of the case are that on 4‑3‑1999, the staff of Central Excise Collectorate, Multan visited the premises of the appellant's unit and on inspection of its record, found a quantity of 455 bundles of paper board each weighing 23 kgs. in excess of the balance shown in the RG‑1 Register. Since the management of the appellant unit could not give any justification for the excess quantity of paper board, the same was seized by the central excise staff for violation of relevant provisions of the Central Excises Act, 1944. Inspection of the Central Excise Record also revealed that the. appellant had not been recording correct production in the past as well. According to their calculation, the production of the Mills was not less than 75 bundles per hour whereas the appellant was showing production of only 6‑7 bundles per hour. The evaded amount of central excise duty was worked out on this account by the central excise staff at Rs.20,28,

758. A contravention case was accordingly made out against the appellant and forwarded to the learned Adjudicating Officer, who after giving due opportunity of defence, held the charges against the appellant established and ordered confiscation of the seized goods besides demand of aforesaid amount of CED alongwith additional duty and imposition of penalty of Rs.2,00,

000. The confiscated goods were, however, allowed to be redeemed on payment of fine of Rs.50,000 in addition to leviable duty and taxes.

3. The appellant has challenged the aforesaid order of the Adjudicating Officer through instant appeal. It has been argued on behalf of the appellant that the appellant unit had been showing its production correctly in the central excise records and was not, in any way, involved in evasion of duty or violation of the provisions of Central Excise Law and Rules. The quantity of 455 bundles reportedly found in excess of the balance shown in the RG‑1 Register was in respect of previous day's duly paid clearance, which had to be taken inside the Mills premises due to heavy rains. Regarding past liability, it has been submitted that the Mill's per hour production was only to the extent of 5‑6 bundles which was duly recorded and cleared on payment of duty, as could be checked from the relevant record. In June, 2000 some addition was made in the machinery as a result of which the production capacity of the unit increased to 15‑16 bundles per hour, which has been confirmed by the departmental team on a recent inspection of the Mills. Since production during the relevant period was correctly recoded, the appellant was not liable to pay any duty on this account. The appellant's counsel had accordingly prayed for setting aside the impugned order.

4. Learned Departmental Representative opposed the appeal. He was, however, required to produce report of the departmental team regarding production capacity of the Mills, referred by the appellant during the course of hearing which he placed on record. According to the report of the Superintendent Central Excise Circle, Multan bearing C. No. IV‑D(8) Cont/10/99/114, dated 27‑1‑2001, the departmental team monitored the production of the unit. on 22‑1‑2001 from 10:15 hours to 18:15 hours and maximum production capacity of the unit was found as 16 bundles weighing 368 kgs. per hour.

5. We have examined the case record and given due consideration to the submissions made by the appellant's counsel. It is admitted that a quantity of 455 bundles weighing 23 Kgs. each was found in excess of the balance shown in the central excise records at the time of visit by the detecting staff. The explanation given by the appellant in this regard is not convincing, as according to law/rules on the subject, goods once cleared on payment of duty could not be taken back into the Mills without permission of the Central Excise Authorities. The order of the Adjudicating Officer to the extent of confiscation of the goods in question is, therefore, lawful. As regards past liability of the appellant, it has been observed that the same was worked out on the basis of production of 75 bundles per hour whereas according to the Superintendent CE Multan's report, dated 27‑1‑2001, the maximum production capacity of the unit is 16 bundles per hour (sic) the appellant has submitted that this production capacity is the result of addition in machinery in June, 2000, which was duly intimated to the Department vide letter, dated 16‑1‑2000 and that prior to this, production capacity was 5‑6 bundles per hour on which they had been paying CED correctly. We have examined the copy of application for CE licence (A‑L1) alongwith letter, dated 16‑6‑2000 intimating the Department about some alterations in the plant, which has been placed on record by the appellant. In the letter, dated 16‑6‑2000, there is no mention of the machinery to be added in the Mills nor there is any mention of the new production capacity of the unit. We, therefore, do not find any force in the appellant's contention in this regard. However, as the department has now re‑determined the production capacity of the unit at 16 bundles weighing 368 kgs. per hour, it is established that the demand of Rs.2028,758 adjudged by the learned Adjudicating Officer on this account is not correct.

6. In view of the above, the department is directed to re‑determine the appellant's liability on the basis of the Mill's production capacity of 16 bundles weighing 368 kgs. per hour and recover the same from it. The amount of redemption fine is reduced from Rs.50,000 to Rs.10,000 while personal penalty of Rs.2,00,000 imposed vide impugned order is totally remitted.

7. The appeal succeeds to the above extent‑and the impugned order is modified accordingly. C.M.A./710/Tax (Trib.) Appeal succeeded.