1987 (2) TMI 295 - AT - Central Excise

Summary

Issues Involved:

1. Removal of goods without payment of duty.
2. Return of duty-paid goods without complying with Rule 173H.
3. Vagueness and inconsistency in the show cause notice.
4. Justification of penalty imposed by the Collector.

Issue-wise Detailed Analysis:

1. Removal of Goods Without Payment of Duty:

The appellant was initially charged with the removal of a large quantity of goods without proper accounting and without payment of duty. However, the dispute was narrowed down to two specific quantities: 39,900 MT and 79,320 MT of steel ingots. The appellant contended that the show cause notice was vague and did not specify the documents used to arrive at these quantities. They argued that both quantities were cleared on payment of duty and provided GP-1 forms as evidence. The Collector rejected their explanation due to inconsistencies in their initial and subsequent responses regarding the destination of the goods.

2. Return of Duty-Paid Goods Without Complying with Rule 173H:

The appellant argued that the goods were returned by customers and sent to their stockyard. The Collector did not accept this explanation, noting discrepancies in the quantities cleared and returned. The department charged the appellant with failing to comply with Rule 173H, which pertains to the return of duty-paid goods. However, the appellant maintained that the goods in question were never received back in the factory, thus negating the applicability of Rule 173H.

3. Vagueness and Inconsistency in the Show Cause Notice:

The appellant contended that the show cause notice was vague and confusing, particularly regarding the 39,900 MT of steel ingots. The notice contained contradictory statements, such as "Under GP-1" and "Without Gate Pass," and "Nil duty" and "On payment of duty." The Tribunal found this contention to have strong merit, noting that the existence or absence of gate passes is a factual question that should be clearly stated. The Tribunal criticized the Collector for not providing a clear-cut finding regarding the gate passes and challans produced by the appellant.

4. Justification of Penalty Imposed by the Collector:

The department imposed a penalty of Rs. 10,000/- on the appellant, citing the large quantity of goods removed without complying with Rule 173H. The Tribunal found this penalty unjustified, noting that the department's own representative conceded that Rule 173Q should not have been invoked and that Rule 210, which provides for a maximum penalty of Rs. 1,000/-, should have been applied instead. The Tribunal emphasized that for imposing a penalty, there must be evidence of deliberate defiance of law, negligence, or criminal intent, which the department failed to establish in this case.

Conclusion:

The Tribunal found that the department had not established the charges against the appellant beyond doubt. The show cause notice was deemed vague, inconsistent, and self-contradictory, and the Collector's findings were similarly flawed. The appellant provided a plausible explanation supported by documents, which the Collector failed to adequately consider. Consequently, the Tribunal set aside the Collector's order and accepted the appeal, also disposing of the department's cross-objection.