1984 (4) TMI 280 - AT - Central Excise

Summary

Issues Involved:
1. Confiscation and redemption of PVC films.
2. Recovery of duty on PVC films.
3. Imposition of penalties under Rule 173Q, Rule 226, and Rule 52A of the Central Excise Rules.
4. Validity of show cause notices in light of Section 40(2) of the Central Excises and Salt Act, 1944.
5. Allegations of clandestine removal of goods and non-compliance with Central Excise procedures.

Summary:
Issue 1: Confiscation and Redemption of PVC Films
The Collector of Central Excise, Bombay, ordered the confiscation of 158 rolls of PVC films but allowed the appellants to redeem the goods on payment of a fine of Rs. 5,000. The appellants argued that the goods were cleared under valid gate passes and that any discrepancies were due to inadvertent errors by their employees. The Tribunal upheld the Collector's decision, stating that the appellants failed to provide satisfactory explanations for the discrepancies and that the breaches were not merely technical.

Issue 2: Recovery of Duty on PVC Films
The Collector directed the recovery of duty on various quantities of PVC films, including laminated and flexible types, which were allegedly removed without proper accounting and payment of duty. The appellants contended that the discrepancies were due to clerical errors and that some goods were used as samples for customers. The Tribunal found the explanations unconvincing and upheld the Collector's order for duty recovery.

Issue 3: Imposition of Penalties
Penalties of Rs. 50,000 under Rule 173Q and Rs. 2,000 under Rule 226 were imposed on the appellants in Appeal No. 1/75, and Rs. 50,000 under Rule 173Q and Rs. 1,000 under Rule 52A in Appeal No. 3/75. The appellants argued that the penalties were excessive and unjust. The Tribunal, however, held that the penalties were justified given the gravity of the offences and the clandestine removal of goods, and thus, upheld the Collector's decision.

Issue 4: Validity of Show Cause Notices
The appellants argued that the show cause notices issued on 4-7-1973 were barred by limitation u/s 40(2) of the Central Excises and Salt Act, 1944, as the alleged offences occurred in 1971 and 1972. The Tribunal, referencing Supreme Court and High Court decisions, held that the period of limitation begins from the date of knowledge of the offence by the Central Excise Officers, which was in January 1973. Therefore, the show cause notices were deemed valid.

Issue 5: Allegations of Clandestine Removal
The appellants were accused of clandestinely removing significant quantities of PVC films without proper accounting or payment of duty. They contended that the allegations were based on unreliable statements from a disgruntled employee and that proper procedures were followed. The Tribunal found that the department provided sufficient evidence to support the allegations, including discrepancies in excise records and the interception of a truck carrying unaccounted goods. The explanations offered by the appellants were deemed unsatisfactory, and the Tribunal upheld the findings of clandestine removal.

Conclusion
Both appeals were dismissed, with the Tribunal affirming the orders of confiscation, duty recovery, and penalties imposed by the Collector of Central Excise, Bombay. The Tribunal found no merit in the appellants' contentions and upheld the validity of the show cause notices and the findings of clandestine removal of goods.