1983 (11) TMI 293 - AT - Central Excise

Summary

Issues Involved:
The issues involved in the judgment are the application of Central Excise Rules, duty demand under Rule 9(2), deficiency in duty under Rule 10A, penalty under Rule 6(2), interpretation of private records, compliance with excise formalities, applicability of exemption notification, suppression of removals, and the burden of proof on the department.

Application of Central Excise Rules:
The appellants were charged with removing W.P. finishes without accountal in statutory records, without payment of duty, and in contravention of Central Excise Rules. The Collector demanded duty under Rule 9(2) and Rule 10A, along with imposing a penalty under Rule 6(2). The appeal against the Collector's order was initially rejected by the Board as time-barred, but on revision, the Central Government directed the Board to consider the appeal on merits.

Interpretation of Private Records and Compliance with Excise Formalities:
The appellants argued that under the physical control system, goods were cleared only after assessment by the Central Excise Officer and payment of duty on gate passes. They disputed the figures worked out by the Department, alleging double-accounting and errors in calculations. They contended that goods were cleared with proper excise clearance documents and that the demand under Rule 10A was time-barred.

Applicability of Exemption Notification and Suppression of Removals:
The Department claimed that the appellants exceeded the limit for exemption under Notification No. 137/60 due to unaccounted production, making clearances liable for reassessment. The Department alleged suppression of removals and invoked Rule 9(2) for non-compliance with excise formalities. The Department argued that Rule 10A was applicable and relied on a decision of the Gujarat High Court.

Burden of Proof and Decision:
The Tribunal considered the period of 7 years during which the factory operated under the physical control system. It noted the absence of evidence supporting clandestine production and removals, questioning the Department's methodology in computation. The Tribunal found that the Department failed to establish the allegations beyond reasonable doubt. Consequently, the impugned order was set aside, giving the benefit of doubt to the appellants.