1997 (12) TMI 596 - AT - Central Excise

Summary

Issues Involved:
1. Calculation of excise duty and penalty.
2. Alleged clandestine removal of goods.
3. Accuracy of the computation method used by the Department.
4. Consideration of wastage in production.
5. Invocation of the extended period of limitation.

Detailed Analysis:

1. Calculation of Excise Duty and Penalty:
The appeal challenges the order-in-original dated 10-3-1993 by the Collector of Central Excise, Meerut, demanding Rs. 70,63,238.00 as duty for 1988-89 and 1989-90 and imposing a penalty of Rs. 5 lakhs. The appellants, engaged in manufacturing Audio-Magnetic Tapes (AMT), argued there were arithmetical errors in the Department's calculations. They claimed the width of the polyester film rolls used in calculations was incorrect, affecting the computed area and resulting duty.

2. Alleged Clandestine Removal of Goods:
The Department alleged that the appellants had manufactured and removed AMT without payment of duty and without proper accountal in statutory records. The Show Cause Notice (SCN) issued on 31-1-1992 alleged non-accountal and non-payment of duty on significant quantities of AMT for the years 1988-89 and 1989-90.

3. Accuracy of the Computation Method Used by the Department:
The appellants contended that the Department's calculations were erroneous. They argued that the Department did not consider the actual width of the polyester films, resulting in incorrect computation of the area of AMT produced. The appellants provided a detailed explanation and illustration of their standard output ratio, which differed from the Department's method. They submitted that the Department's method did not account for wastage and used incorrect assumptions about the number of pancakes produced from film rolls.

4. Consideration of Wastage in Production:
The appellants argued that the Department's calculation did not account for wastage properly. They maintained that standard output ratios already included wastage, and the Department's failure to consider this led to erroneous duty demands. The Collector, however, concluded that the wastage shown in the Form IV Register was adequate and rejected the appellants' claim for additional wastage.

5. Invocation of the Extended Period of Limitation:
The appellants argued that the SCN was issued beyond the normal period of limitation and was based solely on statutory records (Form IV Register and RG-I Register) already available to the Department. They contended that no new evidence of suppression or misdeclaration was presented to justify the extended period of limitation. The Tribunal agreed, noting that the Department's case relied entirely on statutory records, and no private records or other suppressed materials were cited. Consequently, the charge of suppression of facts warranting the extended period of limitation could not be sustained.

Conclusion:
The Tribunal found that the impugned order could not be sustained on the ground of limitation. It was held that the Department's reliance on statutory records without additional evidence of suppression did not justify invoking the extended period of limitation. Consequently, the appeal was allowed, and the impugned order was set aside, granting consequential benefits to the appellants as per law.