Per Shiben K. Dhar: These appeals, directed against common Order-in-Original No. 42/1991 of Collector of Central Excise, were heard together and are being disposed off through this common order.

2. M/s. Standard Pencils Pvt. Ltd., the first appellant, hereinafter referred to as SPPL, are engaged in the manufacture of, among others, eyebrow pencils, bindi pencils, eye-shadows, eye-liners, black lead general pencils, copying pencils, etc. It was alleged that SPPL were evading excise duty on "Eyebrow Pencils" by removing such pencil as Kumkum pencils (Bindi Pencils) taking advantage of exemption claimed on Kumkum pencils. SPPL had entered into an agreement on 1.12.1984 with Lakme for manufacture and supply of 'eyebrow pencil' in the name of Lakme and accordingly were supplying eyebrow pencil in two sizes, medium and large, up to June, 1988 and thereafter, Kumkum pencils in the same brand name and in the same sizes and claiming exemption under Notification No. 235/86 dated 3 4.1986.

2.1 M/s. SPPL were also manufacturing and supplying eyebrow pencils with brand name of Eyetex for M/s Aravind Laboratories up to June, 1987. Kumkum pencils with the brand name of eyetex were also being manufactured and supplied to M/s Aravind Laboratories.

2.2 Sppl are also alleged to have supplied eye brow pencil in the name of black pencils to M/s. Colgate Palmolive (India) Ltd., without payment of duty.

2.3 It is alleged that in addition to common raw materials used in the manufacture of Kumkum pencils and eyebrow pencils, the following four raw materials are used in addition, only in eyebrow pencils. These 4 raw materials are not used in the manufacture of kumkum pencils:

1. Beeswax

2. Liquid Paraffin

3. Stearic Acid

4. Calcium stearate

These raw materials, as observed by Collector from scrutiny of "Raw Material Stock Register", have been regularly consumed by SPPL during the period relevant to the case, i.e., from 1.4.1986 to 3.12.1990. The production of eyebrow pencils reflected in the Daily Stock Account/RG-1 is, it is alleged not in proportion to the quantities of the raw materials consumed as per raw material stock register, and therefore, it is alleged that production of actual quantity of eye brow pencils has been suppressed by SPPL.

2.4. The samples of both kumkum and eyebrow pencils were sent for chemical test. Enquiries were conducted with dealers, main persons concerned in SPPL, Lakme, Aravind Laboratories, etc. and statements were recorded. Based on the entries reflected in the raw material register with corresponding production in RG-1, scrutiny of documents, Chemical Test Report and statements of dealers and other persons concerned in the matter, the Collector held that "all the quantities of kumkum pencils cleared by M/s. SPPL to M/s. Lakme, Bombay and M/s. Arvind Laboratories, Madras, are actually eye brow pencils, cleared in the guise of kumkum pencils, without payment of duty due thereon". He also held that pencils cleared as black pencils to M/s Colgate Palmolive India Ltd. are also eyebrow pencils. Collector also, on the basis of allegation among others, that kumkum was shown as 'eye make-up' in the pamphlets, of Lakme, pencils rejected for exports, were described as 'eyebrow pencils' in the correspondence even though the invoices for these issued by SPPL describes these as kumkum pencils and that their dealers were selling kumkum pencils as eyebrow pencils held, the last appellant, Lakme, liable to action under Rule 209(A).

2.5. Similarly, M/s. Aravind Laboratories, on the grounds among others that their representative used to supervise manufacture of eyebrow pencils at the premises of SPPL and the samples taken from the materials seized from the Arvind Laboratories and Venktesha Agency on test indicated that both types of goods were same, were also held liable for action under Rule 209(A).

2.6 In consequence, the Collector confirmed a demand of duty of Rs. 1,47,10,803/- (Rupees One Crore Forty Seven Lakh Ten Thousand Eight Hundred an