The incident that I am about to narrate took place in May 1980. Central Excise was a department which had unfettered rights to enter any company and inspect the books, seize material and arrest company officials if they suspected that Excise duty was being evaded.
Small Scale industries with an annual turnover of less than Rs.20 lakhs were exempt from Central Excise.Further stoneware articles were not excisable. Under these circumstance a Superintendent of Central Excise suddenly entered into our factory which was manufacturing stoneware products for the chemical industry. Just as he was entering the factory, a trolley full of green unbaked product was being brought in from a shed outside the factory gates where it had been taken for sun drying. This gentleman immediately ordered the gates to be closed and he phoned his department and informed them a trolley full of excisable material had been seized for which no gate pass was made out. Even as we were protesting his action saying that the material was only stoneware material and not a finished product and that our turnover was well within the limits prescribed, his superior officer descended on the factory with another 12 people in tow. He had wrongly heard the officer as saying a lorry full of material and he rushed post haste thinking that material of high volume and value had been caught.
Once he came into the factory and found that only a trolley was seized he berated the officer. Even then these worthies were not willing to leave us alone. They arrested the worker who was pushing the trolley and also summoned my father to the office threatening him with dire consequences. They then took samples of the material and sent it to Ceramic labs in Kolkata and Delhi for analysis to find out if the material was porcelain or stoneware. (Porcelain was an excisable commodity under Section 23 B of the old act).
We were issued a demand notice for Rs 4 lakhs along with interest till date of payment. The case took almost 4 years to get resolved when the lab came back with their report saying that it was just green stoneware clay product. Till the issue was resolved we were compelled to maintain all records as per excise laws and for that period, the business suffered. My father was so upset with the way that these people behaved that he resolved that come what may he would never allow the turnover to exceed 60% of the limits prescribed for the levy of duty.
(This story is based in Coimbatore, Tamil Nadu)