1977 (8) TMI 161 - Commissioner - Central Excise

Summary

Issues: Excise duty evasion, non-maintenance of prescribed records, shortage of semi-processed fabrics, compliance with Central Excise Rules.

Analysis:

The case involved M/s. D.C.M. Mills, manufacturers of Art Silk Fabrics, who sent semi-processed fabrics to sister concerns for further processing but were found with a shortage of 8,974 L. Metres of fabrics during a specific period. The charges against them included not accounting for the sent fabrics, failure to maintain prescribed records, and not accounting for the shortage, contravening various Central Excise Rules (Rule 9(1), 53, 173G, and 226). The assessee defended by stating that they maintained records in forms 'C' and 'D' instead of Appendices 'N' and 'P', and argued that processing losses at the grey stage did not attract excise duty as duty was levied on fully finished fabrics only.

During the personal hearing, the assessee reiterated their defense, claiming that the prescribed records were outdated and not maintained by other mills, and losses at the pre-finished stage did not need to be recorded in R.G. 1, as it was for fully finished goods. They argued that losses were negligible and requested condonation. The authority noted that R.G. 1 did not require recording of grey fabrics, as it was for fully finished goods subject to excise duty, and losses at the grey stage did not impact excise duty. The negligible losses of 0.1% were considered insignificant, and the explanation provided by the assessee was accepted.

In the final order, considering all facts and circumstances, the authority dropped the proceedings against the assessee, concluding that there was no loss of revenue or violation of Rule 9(1) of the Central Excise Rules, 1944. The judgment favored the assessee based on the explanation provided and the negligible nature of the losses at the grey stage.