2017 (6) TMI 261 - AT - Central Excise

Penalty u/r 25 of CER, 2002 - It has been alleged that the Respondent violated the provisions of Rule 12 of Rules 2002 read with Chapter 70 of CETA, 1985, in as much as they have shown unit quantity in pieces and sets instead of Kgs. in their monthly ER-1 Returns - Held that - CBEC by Ministry of Finance (D.R.) letter F.No. 4/7/2005-CX-I dated-31/03/2005 clarified that the standard units of quantity mentioned in the Central Excise tariff have not been made mandatory - penalty set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
Violation of Rule 12 of Central Excise Rules, 2002 by showing unit quantity in pieces and sets instead of Kgs in monthly ER-1 Returns.

Analysis:
The case involved the respondents engaged in the manufacture of glassware, facing a Show Cause Notice proposing a penalty under Rule 25 of Central Excise Rules, 2002 for violating Rule 12 of the Rules 2002 by showing unit quantity in pieces and sets instead of Kgs in their monthly ER-1 Returns. The Adjudicating Authority initially dropped the proceedings with a direction for the respondents to show the unit of quantity as Kgs in their records. The respondents appealed to the Commissioner (Appeal), who allowed the appeal, leading the Revenue to file the present appeal.

During the proceedings, the Appellant Revenue argued that the respondents should use the standard unit of quantity, i.e., Kgs, in their records for clearances for home consumption, as they did during exports. It was contended that the respondents violated the provisions of Rule 12 of Central Excise Rules when submitting ER-1 returns without indicating the proper standard unit of quantity as prescribed under the First Schedule to the Central Excise Tariff Act against goods at Chapter 70. The Adjudicating Authority's Order-in-Original was supported as rightly directing the respondents to follow the statutory requirement.

However, the Commissioner (Appeal) noted that the respondent's products were sold in the market in pieces and sets, and referred to circulars issued by the CBEC indicating that the standard units of quantity specified in the Central Excise tariff were not mandatory. The circular clarified that these units were indicative and not compulsory. The Commissioner (Appeal) also highlighted the need for the respondents to comply with standards of weights and measures rules. In light of the circulars and the circumstances of the case, the Tribunal agreed with the Commissioner (Appeal) and dismissed the appeal filed by the Revenue.

The judgment emphasized that the standard units of quantity specified in the tariff were for facilitating trade statistics and were not mandatory. The Tribunal's decision aligned with the Commissioner (Appeal) based on the circulars provided and the nature of the goods being sold in pieces and sets in the market, ultimately leading to the dismissal of the Revenue's appeal.