S. Kalyanam, Member (J)

1. This appeal is directed against the order of the Collector of Customs and Central Excise, Cochin, dated 19.6.1986 imposing a duty of Rs. 17,47,091.53 and a penalty of Rs. 5 lakhs on M/s. Vitco Rubber Industries Ltd. which is the proprietary concern of the appellant, under Rules 9(2), 52 A, 173Q and 226, a fine of Rs. 50,000/- in lieu of confiscation of the land, building, plant, machinery etc. under Rule 173Q and a further fine of Rs. 5,000/- under Rule 173Q in lieu of confiscation of tread rubber under seizure and a penalty of Rs. 2,000/- on Shri V.K. Thampi, the appellant herein, under Rule 226 of the Central Excise Rules, 1944 (hereinafter referred to as "the Rules").

2. On the basis of intelligence the Central Excise Officers of Ernakulam Division searched the business premises of one Shri Narayanan-kutty, a dealer in tread rubber on 2.8.1985 at about 6.30 p.m. Scrutiny of the accounts relating to the business of the said Narayanankutty and the statement recorded from him revealed that a substantial quantity of tread rubber, manufactured in the appellant's factory, had been clandestinely removed without payment of any Excise duty,. The authorities in continuation of the investigation effected a search of the appellant's factory and residence on 3.8.1985 and recovered a number of incriminating documents and records evidencing manufacture and clearance of tread rubber without payment of Central Excise duty. Appellant, Shri V.K. Thampi also gave a statement which was inculpatory in nature and confessional in character with reference to the production and clandestine removal of goods without payment of excise duty. The appellant also stated that he had not taken any Central Excise licence as per law nor made any declaration for not taking any such licence. It is in these circumstances, after further investigation, proceedings were instituted .against the appellant, which eventually culminated in the present impugned order now appealed against. Shri Dinesh, the learned counsel for the appellant at the outset submitted that inasmuch as the appellant did not respond to the show cause notice and participate in the personal hearing, the evidence on record factually remains unrebutted with the result the appellant confines himself only to the question of law in assailing the impugned order.

3. In the present case a show cause notice was issued to the appellant and others concerned prior to adjudication, on 29.1.1986 and the same was received by the appellant and others on 31.1.1986. The appellant was specifically called upon in the show cause notice to show cause against the proposed action thereunder within 30 days of the receipt of the notice. It was further stated in the show cause notice that, "if no cause is shown against the action proposed to be taken within 30 days of receipt of this notice..., the case will be decided ex parte".

The show cause notice also specifically mentioned that in case the appellant wished to be heard in person before the case was decided, he could mention in his explanation as to whether he wished to be heard. Since no reply was received from the appellant to the aforesaid show cause notice, the adjudicating authority gave a further chance to the appellant and others by issuing a reminder on 13.5.1986 directing the appellant to reply to the said notice within 7 days thereof. It was specifically mentioned therein that the case would otherwise be decided ex parte on available records. Unfortunately, the appellant did not appear and there was no representation of any kind on behalf of the appellant with the result the adjudicating authority on consideration of all the materials in extenso passed the impugned order on 19.6.1986 which is now appealed against.

4. Shri Dinesh, the learned counsel for the appellant submitted that immediately on receipt of the show cause notice the appellant entrusted the brief to an advocate at Cochin and the advocate sent a communication on 3.3.198