K. Prakash Anand, Member (T)

1. In this matter the allegations are that when the Central Excise Officers visited the factory of the appellants by surprise on 21.5.80; they found as follows :

(a) RG-1 Register was written only upto 18.4.80;

(b) gate-passes were written upto 17.5.80;

(c) there were 63 fully packed wooden boxes containing 69,709 Hacksaw Blades and another 19100 pieces of Hacksaw Blades in cardboard packing which were ready for despatch. In respect of these, the appellants would not produce any registers or other documents which could show accountal and manufacture;

(d) there were 3,578 pieces of Hacksaw Blades in excess in the bonded store-room which were not accounted for;

(e) there were shortages of 1,152 pieces of hacksaw blades;

(f) the Central Excise officers also visited the Branch Office of M/s. Technis Industries in Raniganj, Secunderabad on 21.5.80 who were allegedly dealing in Hacksaw Blades manufactured by the appellants, M/s. Indo-Hacks Ltd. In these premises, they found 4,331 pieces of Hacksaw Blades which according to the statement of one Shri C.K. Murthy, representative of the Branch Office were actually supplied by M/s. Indo-Hacks Ltd. without any documents showing the payment of Central Excise duty.

(g) as per the invoices, delivery challans and lorry receipts, the total value of clearances of M/s. Indo-Hacks Ltd. during year 78-79 worked out to Rs. 5,36,648.39. The appellants failed to pay Central Excise duty on clearances above Rs. 5 lakhs as required;

(h) during the year 1979-80, the appellants were found to have removed goods for a value of Rs. 36,44,676.60 without accounting for the production and clearances and without payment of duty;

(i) during the year 1980-81, the appellants cleared goods of the value of Rs. 2,68,869.10 without payment of duty, claiming the benefit of exemption under notfn. No. 71/78-CE dated 1.3.78 to which they were not entitled, as the clearances of the specified goods from the factory exceeded Rs. 15 lakhs in the past financial year of 1979-80 and the total clearances of all excisable goods cleared had exceeded Rs. 20 lakhs.

(j) apart from clearances of Rs. 2,68,869.10 which were made on gate passes but without payment of duty, it was found that the appellants had cleared goods valued at Rs. 4,61,531.12 without issuing Central Excise gate passes during the year 1980-81.

2. Appearing on behalf of appellants Shri K. Narsimhan made the following submissions in respect of the allegations for the 3 years 1978-79, 1979-80 and 1980-81.

(a) 1978-79 : (i) There was no allegation of clandestine removal but only a charge of non-payment of duty allegedly in excess of the value of the exempted limit of Rs. 5 lakhs.

(ii) The value of the goods cleared' is not correctly computed because the original price list was subsequently revised. As a result of the resolution of the Board of Directors dated 2.2.79, this revision in value was verified and approved by the Superintendent of Central Excise on 4.4.79.

(iii) In view of the fact that these values had been accepted and confirmed, the matter could not be re-opened by the show-cause notice issued on 17.11.80.

(iv) The demand of duty allegedly short-levied for the period 1978-79 was also barred by limitation, especially as there was no allegation in the show-cause notice of suppression of facts.

(b) 1979-80 : (i) As regards part II of annexure B of the show-cause notice, it is stated that the letter of the Director General of Supplies Disposals, Hyderabad, dated 1.7.80, leaves no doubt that there was no despatch of goods from the factory of the Appellants in respect of 61 invoices which constituted the basis of the allegations in the statement in question. It is claimed that by not disclosing the correspondence that had passed between the Collector of Central Excise and the Director General of Supplies Disposals, the Collector of Central Excise had violated the principles of natural justice.

(ii) As regards part I of annexure B to the show-cau