2003 (1) TMI 587 - AT - Central Excise

Summary

Issues Involved:
1. Utilization of inputs (Polyester Chips, Mono Ethylene Glycol (MEG), and Purified Terephthalic Acid (PTA)) and corresponding Modvat credit.
2. Authenticity and reliability of ISO-9002 records versus statutory records.
3. Allegations of clandestine removal of inputs.
4. Imposition of personal penalties under Rule 209A.

Issue-wise Detailed Analysis:

1. Utilization of Inputs and Modvat Credit:
The main appellant, M/s. J.K. Corporation Ltd., was found to have discrepancies between the consumption figures of inputs (PTA, MEG, and Polyester Chips) recorded in their statutory records (RG-23A Part-I and RT-5 returns) and those in their internal ISO-9002 records (PTA Charging Register, Shift Engineers' Log Book). The statutory records showed higher consumption, suggesting that the appellant availed Modvat credit on inputs not used in manufacturing. The Commissioner confirmed demands of duties and imposed penalties based on these discrepancies.

2. Authenticity and Reliability of ISO-9002 Records:
The appellant argued that the statutory records were more reliable than the ISO-9002 records, which were meant for quality management and could contain approximations. However, the Commissioner and the Tribunal majority held that ISO-9002 records were more authentic due to their stringent maintenance and periodic audits required for certification. Statements from senior officials confirmed the accuracy of these records.

3. Allegations of Clandestine Removal:
The appellant contended that there was no evidence of clandestine removal, such as sales records or physical stock discrepancies. They argued that the differences in records could be due to human error or approximations in ISO-9002 records. The Tribunal majority, however, found that the unexplained discrepancies and the authenticity of ISO-9002 records supported the allegations of excess Modvat credit availed on inputs not used in production.

4. Imposition of Personal Penalties under Rule 209A:
While the main appellant's appeals were rejected, the Tribunal set aside personal penalties imposed on other individuals under Rule 209A. The Tribunal found no specific evidence that these individuals were aware or had reason to believe that the goods were liable to confiscation, as required under Rule 209A.

Separate Judgments Delivered by Judges:
- Member (Judicial): Upheld the Commissioner's order, rejecting the appeals of M/s. J.K. Corporation Ltd., and setting aside personal penalties on other appellants.
- Member (Technical): Disagreed, finding no sufficient evidence of clandestine removal and attributing discrepancies to errors in record-keeping, thus favoring the appellant.
- Third Member (Technical): Agreed with Member (Judicial), emphasizing the authenticity of ISO-9002 records and the appellant's failure to explain discrepancies satisfactorily.

Final Order:
In view of the majority decision, the appeals filed by M/s. J.K. Corporation Ltd. were rejected, and the appeals filed by other appellants were allowed.