ORDER
Gowri Shankar, Member (T)
1. It is contended that, out of the demand of duty of Rs. 54.49 lacs (approximately) Rs. 45,000/- is not disputed, and Rs. 1.00 lac has already been paid, thus leaving the amount not required to be deposited is Rs. 53.04 lacs. A penalty of Rs. 50.00 lacs under Rule 173Q has also been imposed.
2. Advocate for the applicant says that the demand arises out of the Commissioner’s finding that the applicant could not account for spares of power driven pump or compressors etc manufactured by it. He contends that applicant has not in fact manufactured these goods. It is stated that, right from the commencement of the factory, the applicant was erroneously following a practice of entering the spares (such as washers, bolts, nuts, gascets), which, if purchased from manufacturers and those suppliers of these goods, in the RG1 register alongwith the goods manufactured by it, and cleared the spares on payment of duty. In June, 1988 it came to know that this was incorrect. It therefore stopped following the practice. It continued to show the stock of these goods in the RG1 register. It did not enter in the register quantities of spares subsequently purchased by it, or of these spares which it subsequently cleared without payment of duty. It is contended that this position has been known throughout to the department in that various officers, who took the stock of the goods did not find anything wrong. He further contends that the Commissioner has not considered these facts which were brought to his notice, and has not permitted cross examination of the person who was the jurisdictional Superintendent in 1988, and who, it is claimed, refused to accept the letter, in which the applicant set forth the details of its earlier incorrect practice.
3. It is further contended that the Commissioner has arbitrarily arrived at the value and therefore the duty payable on these goods by value them on the basis of the goods manufactured by it and in the alternative submission which the advocate suggests would be adopted should be the total value of goods divided by number of units. Financial hardship is not pleaded.
4. We have heard the Departmental Representative.
5. We are not prima facie satisfied that the applicant has made out a case for waiver of deposit. It would appear that the RG1 register, maintained by the applicant did not have a separate section for each kind of spares “bought out” (of which there are about 3500 varieties) or the goods manufactured by it. The only basis for the applicant’s claim is its internal records such as issue slips etc. It is no doubt correct prima facie that the applicant has been buying some of these goods from outside. This is shown by delivery challans, invoice etc. However, this is not inconsistent with the fact of the applicant having manufactured these goods. The contention raised before us, that the applicant has not the machinery and equipment to manufacture these goods, does not appear to have been raised before the Commissioner. It is an issue to be considered and decided at the final hearing. Prima facie the fact that the Superintendent who allegedly refused to receive the letter in 1988 was not permitted to be cross examined in 1996 does not, in our view, indicate the failure of natural justice apart from the decision of the Calcutta High Court judgment in Tapan Kumar Biswas v. Union of India 1996 (63) ECR 546 (Cal) which goes against the applicant. The method of valuation to be adopted by the Commissioner no doubt appear to be arbitrary. We cannot however adopt an equally arbitrary method suggested by the applicant only because that method is in its favour. Taking all these factors into account, we are of the view that, on the applicant depositing Rs. 25.00 lacs towards duty within three months from today, we waive pre deposit of the balance of duty and penalty.
6. Compliance on 1-9-1997.