1989 (6) TMI 204 - AT - Central Excise

Summary

Issues Involved:
1. Shortage of machines and alleged clandestine removal.
2. Errors in RG1 register entries.
3. Rejection of explanations by the Additional Collector.
4. Imposition of duty and personal penalty.
5. Maintenance of RG1 register and statutory compliance.

Summary:

1. Shortage of Machines and Alleged Clandestine Removal:
The appeal challenges the Order-in-Original directing the appellants to pay duty on four machines valued at Rs. 1,75,380/- and imposing a personal penalty of Rs. 1500/-. The duty amount was quantified at Rs. 14,030.40. On 16-4-1982, Central Excise officers found a shortage of one machine each in four categories during a surprise visit. The factory manager admitted the discrepancies, attributing them to accounting errors.

2. Errors in RG1 Register Entries:
The appellants explained the discrepancies as errors in the RG1 register:
- For the 10 x 7 concrete mixture, errors included short accounting of three machines on 25-4-1981, a totalling mistake on 25-12-1981, and double entry of two machines.
- For the 14 x 10 concrete mixture, a machine was twice accounted for in December 1981.
- For the Jaw crusher, a machine was twice accounted for between September 1978 and March 1979.
- For the Rotary Screen Machine, it was re-entered as part of a crushing plant without a corresponding debit entry.

3. Rejection of Explanations by the Additional Collector:
The Additional Collector rejected these explanations, citing inconsistencies and absurdities in the records. He noted that accepting the explanations would result in nil balances on certain dates, which was not the case. The appellants argued that the errors were due to inefficiency and not malafide intent, supported by documentary evidence.

4. Imposition of Duty and Personal Penalty:
The Additional Collector concluded that the discrepancies indicated clandestine removal of machines and imposed duty and penalty. The appellants contended that the department failed to provide cogent evidence of clandestine removal, relying instead on assumptions.

5. Maintenance of RG1 Register and Statutory Compliance:
The appellants admitted to improper maintenance of the RG1 register due to staff inefficiency. The department argued that proper maintenance is mandatory, and breaches render the appellants liable to penalty. The tribunal noted that while irregularities were present, they did not conclusively prove clandestine removal.

Conclusion:
The tribunal found that the explanations provided by the appellants were plausible and not adequately refuted by the department. The discrepancies were attributed to errors in record-keeping rather than intentional removal of machines. The appeal was allowed, and the order of the Additional Collector was set aside, with consequential relief to follow.