1983 (12) TMI 284 - AT - Central Excise

Summary

Issues: Imposition of penalty and demand of duty on appellants for removal of defective "Demo" gramophone records without excise formalities.

Analysis:
1. The main issue in this appeal was whether the penalty of Rs. 3,000 and the demand of duty on the appellants for the removal of "Demo" records from the factory were justified. The appellants argued that the defective records were not fit for sale and were an inherent byproduct of the manufacturing process. The Excise authorities noticed the removal of these records without following formalities, leading to a show cause notice demanding duty and imposing a penalty.

2. The Collector (Appeals) upheld the demand of duty and reduced the penalty from Rs. 5,000 to Rs. 3,000. The appellants contended that the defective records were not goods for excise purposes and that the findings of the Collector were not based on evidence. They also argued that no penalty was warranted, and the demand of duty was beyond the permissible time limit.

3. During the appeal hearing, the appellants' consultant argued that the damaged records did not complete the manufacturing process, but the Bench concluded that excise formalities had to be followed even for defective records. The demand of duty on these records was deemed justified, regardless of their condition.

4. The issue of the time period for the demand of duty was also raised. The appellants argued that the demand should only cover the six months preceding the show cause notice, as there was no allegation of collusion, fraud, or misstatement. The Tribunal agreed, limiting the demand to this period and setting aside the rest of the duty demand.

5. Regarding the penalty, it was noted that the appellants had not entered the demo records in statutory records but had maintained other records that were known to the Excise authorities. The Tribunal found that the removal of records was not with the intent to evade duty, leading to the decision to set aside the penalty imposed on the appellants.

6. In conclusion, the penalty against the appellants was set aside, and the demand of duty was restricted to the six months preceding the show cause notice. The appeal was partly allowed based on these findings.