2007 (7) TMI 497 - AT - Central Excise

Summary

Issues involved:
The issues involved in the judgment are the demand of duty under Rule 223A, the plea of limitation raised by the appellants, the penalty imposed under Rule 173Q, and the proper maintenance of stock and records by the appellants.

Demand of Duty under Rule 223A:
The Department issued a show-cause notice demanding duty on the shortage of glass refills found during a physical stock verification. The original authority confirmed the duty demand under Rule 223A, which imposes liability on the manufacturer for shortages in excisable goods. However, the show-cause notice did not invoke Section 11A of the Central Excise Act for recovery of duty, which requires specific allegations for invoking the extended period of limitation. As the notice did not mention the necessary ingredients for invoking the larger period of limitation, the demand of duty was set aside on the ground of time-bar.

Plea of Limitation:
The appellants filed an application to add a new ground to their appeal, raising the plea of limitation against the demand of duty. The appellants argued that limitation is a legal issue that can be raised at the second appellate stage. The Tribunal allowed this application based on previous decisions, stating that the plea of limitation could be raised for the first time in appeal before the Tribunal. Therefore, the plea of limitation was entertained in the present case.

Penalty Imposed under Rule 173Q:
The appellants were liable for a penalty under Rule 223A for discrepancies in maintaining stock and records. The lower authorities imposed a penalty of Rs. 5,000 under Rule 173Q, which was also invoked in the show-cause notice. The appellants argued that the specific clause of Rule 173Q was not mentioned in the notice or orders, leading to a request for setting aside the penalty. However, the Tribunal upheld the penalty to the extent prescribed under Rule 223A, which is Rs. 2,000, as the penalty imposed exceeded the prescribed amount. The penalty was sustained at Rs. 2,000, and the appeal was partly allowed.