G. Sankaran, Sr. Vice-President

1. This is an appeal against the Order-in-Original No. 49 (4006.10) CE/87-Addl. Collr.-14/89 dated 28.2.1989 passed by the Additional Collector of Central Excise, Bhubaneswar.

2. By the impugned order, the Additional Collector of Central Excise:

(i) held that the product "Tread Rubber" manufactured by the appellants was classifiable under Item No. 16A(2) of the First Schedule to the Central Excises and Salt Act, 1944, as it stood till 28.2.1986 and under sub-heading 4006.10 of the Schedule to the Central Excise Tariff Act, 1985 from 28.2.1986;

(ii) confirmed a demand for duty amounting to Rs. 69,846.85 towards Central Excise duty payable on the aforesaid product cleared from 16.8.1985 to 30.12.1986, holding that the extended period for demand of duty in terms of Section 11A of the Central Excises and Salt Act was applicable to the case;

(iii) confirming the valuation of the product as set out in the show cause notice as the value for the purpose of assessment and demand of duty;

(iv) held that the appellants were liable to pay duty on the product at the tariff rate (that is, the rate set out in the Central Excise Tariff Schedule) since the appellants did not fulfil the conditions set out in Central Excise Notification No. 184/85-CE or 232/85-CE, as amended; and

(v) imposed a penalty of Rs. 5000/- on the appellants under Central Excise Rules 9(2), 52A(5), 173Q and 210, for contravention of several provisions of the Central Excise Rules.

3. We have heard Shri B. B. Ahuja, Advocate, for the appellants and Shri V. Chandrasekharan, DR, for the respondent.

4.1 Central Excise Notification No. 85/85 dated 17.3.1985 issued by the Central Government under Central Excise Rule 8(1), in supersession of Notification No. 83/83-CE dated 1.3.1983, exempted inter alia rubber products falling under Item No. 16A of the Central Excise Tariff Schedule from the whole of the excise duty leviable thereon up to an aggregate value not exceeding Rs. 7.5 lakhs in the case of first clearances of the goods and from excise duty in excess of 25% of the duty leviable in the case of clearances over, and immediately following, the aforesaid limit but not exceeding another Rs. 7.5 lakhs. There was exemption on a graded scale in respect of further slabs of clearances which are not relevant for our present purpose. There were several conditions set out in the notification. The condition with which we are concerned is that the exemption was applicable to a manufacturer if he filed a declaration with the Assistant Collector of Central Excise that the aggregate value of clearances of all excisable goods by him or on his behalf, for home consumption, from one or more factories, during the financial year was not likely to exceed Rs. 75 lakhs, and if the aggregate value of clearances of all excisable goods by him or on his behalf, for home consumption, from one or more factories, during the financial year did not exceed Rs. 75 lakhs. By amending Notification No. 183/85-CE, dated 9.8.1985, serial number 20 of the Schedule appended to the Notification No. 85/85 reading:

"Rubber Products"

was substituted by the following entry:

"Rubber Products (other than tread rubber and camel back)

The effect of this amending notification was that tread rubber and camel back which, till 8.8.1985, were eligible for exemption in terms of Notification No. 85/85, were from 9.8.1985 taken out of the purview of the exemption.

4.2 Simultaneously, another Notification No. 184/85-CE, dated 9.8.1985 was issued specific to tread rubber and camel back. This notification exempted these two products up to a value of Rs. 7.5 lakhs cleared for home consumption, by or on behalf of a manufacturer from one or more factories, or from any factory by or on behalf of one or more manufacturers, during a financial year from the excise duty leviable thereon as was in excess of the amount calculated at 12% ad valorem. This exemption, again, was subject to several conditions set out in the no