2004 (10) TMI 394 - AT - Central Excise

Summary

Issues:
Demand of duty and penalty on the ground of missing petrol engines in the RG-I stock.

Analysis:
The case involves an appeal against the demand of duty and penalty due to missing petrol engines in the RG-I stock of the appellant. During a verification visit to the appellant's premises, it was discovered that out of 24 petrol engines entered in the RG-I stock, only 18 engines were physically available. The authorities found that the 18 engines produced by the appellant were missing certain parts like piston and crankshaft. Consequently, duty demand was confirmed, and a penalty was imposed based on the assumption that these engines could not be accepted as the ones entered in the RG-I stock.

Upon review of the facts and arguments presented, it was noted that the appellant did produce 18 engines during verification, even though they were deemed incomplete due to missing parts. The appellant contended that the absence of certain parts should not lead to the conclusion that the goods were not available in stock, suggesting that incomplete goods had been mistakenly entered in the RG-I register. On the other hand, the authorities argued that the RG register is meant for finished goods, and incomplete items should not be accepted as valid entries.

The appellate tribunal observed that the mere absence of certain parts should not be grounds for discarding the petrol engines that were physically present during the verification. There was no evidence provided to show that the 18 engines in stock did not match the ones entered in the RG stock. It was emphasized that the accounting of incomplete finished products in the RG-I register does not constitute an offense warranting confiscation of goods or duty demand. Duty is only payable upon clearance of goods, and in this case, the demand of duty for the 18 engines found in stock, along with the penalty imposed, was deemed unsustainable. Consequently, the appeal was allowed, and the impugned order was set aside.