1987 (2) TMI 297 - AT - Central Excise

Summary

Issues Involved:
1. Vagueness of the Show Cause Notice.
2. Alleged Removal of Goods Without Payment of Duty.
3. Alleged Non-compliance with Rule 173H.
4. Imposition of Penalty.

Detailed Analysis:

1. Vagueness of the Show Cause Notice:
The appellant argued that the show cause notice was vague, particularly regarding the quantities of 39,900 MT and 79,320 MT of steel ingots. The notice did not specify the documents referenced for these quantities, making it difficult for the appellant to respond adequately. The Tribunal found merit in this argument, noting that the show cause notice contained contradictory statements such as "Under GP-1," "Without Gate Pass," "Nil duty," and "On payment of duty," which made the notice confusing and improper. The Tribunal emphasized that the existence or non-existence of gate passes is a factual matter and cannot be both true simultaneously. Therefore, the Tribunal concluded that the show cause notice was vague and confusing, supporting the appellant's contention.

2. Alleged Removal of Goods Without Payment of Duty:
The appellant contended that the disputed quantities were duly cleared on payment of duty and provided gate passes (GP-1s) and challans as evidence. However, the Collector did not accept these documents, citing inconsistencies in the appellant's initial and subsequent explanations regarding the delivery destinations. The Tribunal criticized the Collector's scrutiny as incomplete and vague, noting that the Collector failed to record a clear finding on the gate passes/challans produced. The Tribunal found that the appellant provided a plausible explanation and that the charge of clandestine removal with intent to evade duty was not established beyond doubt.

3. Alleged Non-compliance with Rule 173H:
The department charged the appellant with returning duty-paid goods without complying with Rule 173H. The appellant argued that the quantities in question were part of consignments sent under GP-1s and were returned by customers to their stockyard. The Collector did not accept this explanation due to discrepancies in the quantities cleared and returned. The Tribunal found the Collector's reasoning flawed, stating that it is not necessary for a customer to return the exact quantity received. The Tribunal noted that the department failed to prove that the documents provided by the appellant were irrelevant or did not relate to the goods in question. Consequently, the Tribunal concluded that the charge of non-compliance with Rule 173H was not proven beyond doubt.

4. Imposition of Penalty:
The Collector imposed a penalty of Rs. 10,000/- on the appellant. The Tribunal found this imposition unjustified, noting that the penalty was based on vague charges and incomplete scrutiny. The Tribunal highlighted that Rule 173H violations do not necessitate invoking Rule 173Q and that the department could have confined itself to Rule 210, which provides for a maximum penalty of Rs. 1,000/-. The Tribunal emphasized that imposing a penalty requires proving deliberate defiance of law, negligence, or criminal intent, which the department failed to do in this case. Therefore, the Tribunal set aside the penalty imposed by the Collector.

Conclusion:
The Tribunal concluded that the department failed to establish any of the charges against the appellant. The show cause notice was found to be vague, inconsistent, and self-contradictory, and the Collector's findings were similarly flawed. The appellant provided a plausible explanation, and there was no reason to doubt it. As a result, the Tribunal set aside the Collector's order and accepted the appeal, also disposing of the department's cross-objection.