ORDER R.B. Misra, J.
1. Heard Sri Bharatji Agarwal alongwith Sri Piyush Agarwal, learned Counsel for the petitioner and Sri A.K. Singh, Standing Counsel for the respondent. By the consent of the learned Counsel for the parties, the present writ petition is being finally decided under the second proviso of Rule 2 Chapter XXII of the High Court Rules.
2. The brief facts necessary for adjudication of the present writ petition are that petitioner is a public limited company incorporated under the Indian Companies Act, and engaged in the manufacturing of cement falling under Chapter 2509.29 of the Central Excise Tariffs Act and is duly registered under the Central Excise Act. For the manufacture of Cement following raw materials are used; (i) Clinker (ii) Gypsum (iii) Slag. In respect of clinker, excise duty charged from the petitioner manufactured for that petitioner has maintained the raw material account in PG-23/A Part-I in respect of clinker and Gypsum and the entire raw materials purchased by the petitioner were duly recorded in respect of the record of slag. The record of slag has been maintained in the regular books of account which has been informed by letter dated 14 2.1997 of petitioner to the Central Excise authority. In the manufacture of cement, slag was also used by the petitioner hence while making declaration as required under Rule 173 of the rules the petitioner has specifically declared the product manufactured by the petitioner as slag cement. (Annexure-2) and the petitioner's factory was also visualised and checked on 21.8.1998 and the statement of one Murari Lai Sharma was recorded on 29.1.1999.
3. A show cause notice was issued and the Commissioner Central Excise passed an order on 21.8 2001 while observing as below:
Non-recording of such inputs which constitute 20% to 30% in the final product, non-maintenance of RG-23A for 3 days, shortage in the stocks in factory are sufficient factors to prove that production was being suppressed by the party. Besides, it has clearly been admitted that on records, only OPC has been manufactured and cleared.
There is a feeble attempt to prove that they were using slag in their unit by submitting the copies of declaration submitted by them under Rule 57G. On a careful look of the 'Declaration', it may be seen that slag has not been declared as an input by them. Also, in column No. 1 under heading' Final Product' they have only given a broad description taken straight from the Tariff which is not sufficient to prove that slag cement was declared by them to the department as one of the finished goods. This fact was all along concealed from the department. The product under heading 'others' in the declaration has been given as 'N.P. Cement'. I fail to understand as to how 'N.P. Cement' could be construed as slag cement as contended by the notices.
I am, therefore, convinced that slag cement was manufactured by them out of the inputs procured without proper accounting and cleared without payment of duty. The demand therefore, appears to have been correctly issued.
XX XX XX No manufacturer will ever leave traces of clandestine removal for verification by department and to prove their case through them. There are sufficient corroborative evidence to establish the department's case, of suppression of production, by the party. Apex Court in the case of M/s. D. Bhoormal v. Collector has held that it is not for the department to prove the case with mathematical precision. The other corroborative evidences on record leaves me in no doubt that the allegations contained in the SCN have been proved.
4. In view of the above observations a demand for Rs. 15,48,120 (Rs. Fifteen Lakh Forty Eight Thousand One Hundred and Twenty only) under proviso to Section 11A(1) was affirmed and a penalty of Rs. 15,48,120 (Rs. Fifteen Lakh Forty Eight Thousand One Hundred and Twenty only) under Section 11AC of the 'Act' was imposed by order dated 21.8.2001 (Annexure-8).
5. In the appeal preferred against the above order the petitioner under Section 35B of the 'Act' before Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi was approved alongwith stay waiver of pre-deposit of above amount. It also appears that on 22.4.2000 by (Annexure-13) the General Manager has written a letter to Joint Director, Industries, Bareilly recommending the petitioner to be categorised as a sick industry on the basis of continuous losses in the three previous years.
6. Learned Counsel for the petitioner has invited attention of this court to the circular (Annexure-14). According to Clause 4.3 Raw material account:-every assessee is required to maintain under Rule 173G(4) a daily account of important raw material in Form IV and also to submit a quarterly return in Form RT5 under Rule 55 of the Central Excise Rules, 1944. Learned Tribunal has considered all the facts and circumstances of the case while adjudicating the waiver of pre-deposit of the duty amount, and has observed as below:
We have heard both sides and gone through the records. The bare perusal of the impugned order shows that the appellants had used slag as one of the inputs for manufacture of the cement during the disputed period, but did not record the same in the statutory records. The Commissioner has recorded detailed reasons for confirming the duty and imposing penalty on the appellants as according to him the cement manufactured by using slag as an ingredient, in the inputs, was removed without discharging duty. Therefore, the appellants, in our view, do not have a strong, prima facie, case for allowing their stay application unconditionally.
The learned Tribunal by looking to the facts and circumstances and the financial position of the petitioner directed by his order dated 4.2.2002 to make pre-deposit of Rs. 5 lakhs on or before 6.5.2002 and on doing so the balance duty amount and the full penalty amount was to be waived and recovery was to be stayed till the disposal of the appeal.
7. Learned Counsel for the petitioner has placed reliance on , (Vijay Packaging System Ltd v. Commissioner of Customs & Central Excise, A.P.), in respect of consideration of stay/dispensation of pre-deposit by Tribunal, the Supreme Court has observed that Tribunal itself in its order found that appellant has a prima facie case and the appellant was before the BIFR, therefore, it was appropriate in the interest of justice that the appeal was to be heard by Tribunal without payment of the disputed amount of excise duty. In (George Verghese v. Collector of Central Excise), it was held that (para 6) the Tribunal cannot pass an order in absence of proper material or relevant material, more so, when the Tribunal failed to consider as required to Rule 173 for determination, therefore, the appeal is directed to be restored to be decided after hearing the assessee. In 1978 ELT (J172), (Oudh Sugar Mills v. Union of India), where a show cause notice issued on the basis of average production, and based on no evidence for removal of goods without payment of duty human ailment was found to have significant part in the processs of manufacturer and average production cannot be made basis for issue show cause notice therefore, the findings based on such show cause notice was treated to be without any tangible evidence and was taken as an interference involving unwarranted assessment and were held to be vitiated by an error of law.
8. I have heard learned Counsel for the parties and have perused the records and find that petitioner has only been recommendation for sickness of the industry however identification and categorisation of the petitioner as a sick unit is yet to be made however, the observation made in the order dated 21.1.2002 of the Commissioner of Central Excise has been considered by learned Tribunal besides other aspects that only slag cement is not an essential ingredients for production and keeping in view the entire aspects order dated 4.2.2002 has been passed. However, taking on sympathetic view in the facts and circumstances, and keeping in view the financial conditions of the petitioner it would be necessity in the interest of justice to ask the petitioner to deposit Rs. 3 lacs in cash on or before 30th July 2002 before the concerned authority and giving security of remaining amount of Rs. lacs other than cash or bank guarantee before the concerned authority, on making such deposit the requirement to pre-deposit of the balance duty amount and full penalty amount shall stand waived and recovery shall be stayed till disposal of the appeal before the learned Tribunal. However it made clear that if the directions of this Court is not complied with within stipulated time, the petitioner shall not be given protection and without further reference the above condition shall be seized to exist.
In the light of the above observation the writ petition is disposed of accordingly.