ORDER
S. Kalyanam, Member (J)
1. Since we propose to dispose of the appeal itself today on certain points, we grant waiver of pre-deposit of duty and penalty pending disposal of the appeal today.
Appeal No. E/170/89/MAS
2. This appeal is directed against the order of Collector of Central Excise, Cochin, dated 1-2-1989 levying a duty of Rs. 11,94,098.80 and a penalty of Rs. 3,00,000/- under the provisions of the Central Excises and Salt Act, 1944, the Act for short. The appellants herein are manufacturers of tread rubber and on the basis of recovery of certain records from the premises of the appellants as also from the Accountant’s premises and on the basis of statements recorded from their employees, proceedings were instituted by the Department by issue of show cause notice dated 29-1-1988 for levy of duty on the tread rubber manufactured and removed clandestinely without payment of duty for the period from 1-1-1983 to 7-7-1987 and the proceedings eventually culminated in the present impugned order now appealed against.
3. Shri C. Chidambaram, the learned Consultant for the appellants at the outset submitted that quantum of duty on the alleged clandestine removal of tread rubber without payment of duty has been worked out on the basis of consumption of Sulphur by the appellants. It was urged that according to the adjudicating authority the total quantity of Sulphur for the period in question consumed by the appellant was 6543.500 Kg which would account for the production of 355966.400 Kg of tread rubber and deducting the accounted production of 189219.500 Kg of tread rubber, the appellants have been levied duty in respect of the balance quantity of tread rubber alleged to have been clandestinely manufactured and removed. The learned Consultant assailed the impugned order on three grounds inter alia. It was urged that the appellants are eligible for the benefit of Small Scale Industries Exemption Notification applicable at the relevant time and even assuming for the purpose of argument that tread rubber was clandestinely removed without payment of duty that would not disentitle the appellants to the benefit of Small Scale Industries Exemption Notification if the appellants are otherwise entitled to the same under the law. In this context the learned Consultant placed reliance on the Special Bench decision of the Tribunal in the case of Atlas Radio and Electronics Pvt. Ltd. v. Collector of Central Excise, reported in 1989 (39) E.L.T. 123 (Tribunal). It was further urged that uniform rate of duty for the goods admittedly has been worked out for the entire period 1983 to 1987 and the adjudicating authority is in error to have adopted such a uniform rate right through for the entire quantity of tread rubber alleged to have been clandestinely removed without payment of duty. In this regard the learned Consultant placed reliance on the ratio of the ruling of the Special Bench in the case of Daya Ram Metal Works Pvt. Ltd. v. Collector of Central Excise, Baroda reported in 1985 (20) E.L.T. 392 (Tribunal). Finally it was urged that the show cause notice dated 29-1-1988 was served on the appellants on 22-2-1988 and since in the impugned order duty is levied from 1-1-1983 to 7-7-1987, which is more than five years the same is contrary to law.
4. Shri KM Vadivelu, the learned D.R. submitted that under the impugned order the learned adjudicating authority has not gone into the question with reference to the applicability of the various Small Scale Industries Exemption Notification in arriving at the quantum and that being the case it is not possible for him work out the quantum in terms of various Exemption Notifications and therefore the matter may be remanded for consideration in the light of the Special Bench ruling and applicability of Exemption Notifications. The learned D.R. further urged that the other pleas canvassed could also be considered by adjudicating authority as per law.
5. We have carefully considered the submissions made before us. On going through the records, we find that the quantum of duty has been worked out on the basis of consumption of Sulphur by the appellants, for the period in question with reference to the accounts maintained by the appellants. We find considerable force in the submission of the learned Consultant that the quantum with reference to the applicability of various Small Scale Industries Exemption Notifications applicable to the appellants should have been taken into consideration before quantifying the duty. We find that this has not been done by the adjudicating authority in the impugned order. It was contended before us that if the appellants were given the benefit of various Exemption Notifications as applicable to them under the law, the appellants may not be required to pay any duty even assuming for the purpose of argument that the appellants have removed tread rubber clandestinely without payment of duty. We are not expressing any opinion on the question as to what extent the appellants would be entitled to the benefit of Exemption Notifications in respect of the quantity alleged to have been clandestinely removed by them. Such an exercise is not possible at the appellate stage without reference to the original records. In the Special Bench Ruling in the case of Atlas Radio Electronics Pvt. Ltd. referred to above, it has been held that the concessional rate laid down in the Exemption Notification is not dependent on the condition that it would be applicable to only those manufacturers who had disclosed their manufacturing activity to the Department and would not be applicable to others in whose case the manufacturing activity was detected later by the Department. The Special Bench has held that rate of duty was quite independent of the question of taking out a licence or filing a classification list etc. The concessional rate is applicable to all manufacturers who fulfilled the terms of the Notification. Since a specific plea in this regard has been taken by the appellants with reference to the applicability of various Small Scale Industries Notifications and entitlement thereto and since the same has not been adverted to much less considered in the impugned order, without expressing any opinion on merits with reference to the applicability of the various Exemption Notifications and leaving the issue to be decided by the adjudicating authority, we set aside the impugned order and remit the issue for reconsideration by the lower authority as per law in the light of our observations and the contentions canvassed before us, in accordance with law and in the light of the evidence available on record. The appeal is accordingly remanded.