2003 (10) TMI 517 - AT - Central Excise

Summary

Issues Involved:
1. Discrepancy in production figures.
2. Allegation of suppression and invocation of the extended period of limitation.
3. Liability for penalty and interest under Sections 11AC and 11AB of the Central Excise Act, 1944.

Issue-wise Detailed Analysis:

1. Discrepancy in Production Figures:
The case revolves around the discrepancy in the production figures of detergents by M/s. Stepan Chemicals Ltd. (SCL) for the year 1994. The balance-sheet showed a total production of 35,977 M.Ts, whereas the RT 12 returns reflected only 30,079.768 M.Ts. The appellants contended that the figures were inflated due to an error in recording the production of Wheel Bar Blue (125 gms). Specifically, the figure of 1,110.075 M.Ts was mistakenly read as 7,110.075 M.Ts, causing an overstatement by 6,000 M.Ts. Additionally, the reprocessing figure of 0.165 M.Ts was read as 20.165 M.Ts, and the reprocessed soaps amounting to 82.3608 M.Ts were wrongly included in the detergent production figures. The Tribunal found substance in these contentions, noting that the original fax sent by SCL to HLL HQ contained black marks that led to these errors.

2. Allegation of Suppression and Invocation of Extended Period of Limitation:
The show cause notice dated 22-7-1999 invoked the extended period of limitation on the grounds of suppression of facts. However, the Tribunal found that the discrepancy was due to clerical errors and not intentional suppression. The Tribunal emphasized that there was no charge or finding of clandestine removal of any quantity of detergents, nor was there any evidence to support such an allegation. The same firm of Chartered Accountants that prepared the balance-sheet also confirmed the accuracy of the production and excise records maintained by the factory.

3. Liability for Penalty and Interest under Sections 11AC and 11AB of the Central Excise Act, 1944:
The Commissioner had confirmed the demand for differential duty along with interest and imposed a penalty equal to the duty amount. However, given the Tribunal's findings that the discrepancy was due to genuine clerical errors and not suppression, the demand for duty was deemed unsustainable. Consequently, the penalty and interest imposed under Sections 11AC and 11AB were also set aside.

Conclusion:
The Tribunal concluded that the errors in the balance-sheet figures were due to clerical mistakes and not intentional suppression. The demand for differential duty, along with the penalty and interest, was set aside. The appeal was allowed, and the impugned order was overturned.