1999 (11) TMI 294 - AT - Central Excise

Summary

Issues Involved:
1. Illicit removal of finished goods without accounting in RG 1 register and without Central Excise gate passes.
2. Removal under the cover of Central Excise gate passes which were thereafter canceled.
3. Under valuation of goods by not including capping and packing charges.
4. Taking wrong credit in RG 23A Part II register on rejected goods.

Issue-wise Detailed Analysis:

1. Illicit Removal of Finished Goods Without Accounting in RG 1 Register and Without Central Excise Gate Passes:
The show cause notice alleged that the appellants illicitly removed finished goods without proper accounting and without Central Excise gate passes. The adjudicating authority found discrepancies in the goods out register maintained by the security guards and concluded that there was illicit removal of goods amounting to Rs. 4,01,666.93. However, the appellants provided a reconciliation statement showing that all removals were accounted for with corresponding gate passes and invoices. The Tribunal found that the adjudicating authority did not properly consider this reconciliation statement, which nullified the department's case under Annexure A. Thus, the demand of Rs. 4,01,666.93 was set aside.

2. Removal Under the Cover of Central Excise Gate Passes Which Were Thereafter Canceled:
The show cause notice alleged that the appellants removed goods under Central Excise gate passes, which were later canceled, leading to evasion of duty amounting to Rs. 89,121.92. The appellants argued that the cancellations were due to non-availability of transport and that they had informed the department about these cancellations. The Tribunal found that the appellants had indeed informed the department and that the department had acknowledged these cancellations. Therefore, the demand of Rs. 89,121.92 was set aside.

3. Under Valuation of Goods by Not Including Capping and Packing Charges:
The show cause notice alleged that the appellants undervalued their goods by not including capping and packing charges, resulting in a duty evasion of Rs. 90,849.90. However, the adjudicating authority found that the undervaluation allegation was not substantiated and upheld the appellants' contention, thus dropping the demand of Rs. 90,849.90.

4. Taking Wrong Credit in RG 23A Part II Register on Rejected Goods:
The show cause notice alleged that the appellants took wrong credit of Rs. 56,470.62 on rejected goods. The adjudicating authority found that the appellants had taken credit on rejected finished products, which were not declared as inputs under Rule 57G. The Tribunal upheld this finding, confirming the demand of Rs. 56,470.62.

Other Findings:
The Tribunal also considered the issue of limitation and found that the extended period of limitation was applicable due to the appellants' suppression of facts and procedural lapses. The Tribunal reduced the penalties imposed on the appellants, considering the reconciliations provided and the procedural errors.

Order:
The appeals were allowed in part. The Tribunal confirmed the demand for duty amounting to Rs. 1,22,920/- and reduced the penalties to Rs. 1 lakh on the company and Rs. 20,000/- on the director. The confiscation of land, building, plant, and machinery with a redemption fine of Rs. 1 lakh was set aside.