1990 (2) TMI 180 - AT - Central Excise

Summary

Issues Involved:
1. Demand of Central Excise Duty
2. Confiscation of Goods
3. Imposition of Penalty
4. Alleged Human Error in Stock Verification
5. Compliance with Central Excise Rules

Detailed Analysis:

1. Demand of Central Excise Duty
The appellants, M/s Goodyear India Limited, were found with discrepancies in their stock during a physical verification by Central Excise staff. Specifically, 613 tyres, tubes, and flaps were loaded on a truck against the documented 606, and shortages and excesses were found in the bonded warehouse. The Adjudicating Authority concluded that the shortages of 1114 tyres, tubes, and flaps were removed clandestinely without payment of duty amounting to Rs. 1,00,502/-. The appellants contested this, attributing it to human error and heavy stock due to market recession. However, the Tribunal upheld the demand, emphasizing that the appellants failed to maintain proper records as required under Rule 47 of the Central Excise Rules, 1944.

2. Confiscation of Goods
The Adjudicating Authority ordered the confiscation of 831 tyres, tubes, and flaps found in excess during the physical verification. Although these goods were released provisionally on bond, the authority appropriated an amount of Rs. 1,00,000/- out of the bond as value redemption fine. The Tribunal supported this decision, noting that the excess goods were not accounted for in the statutory records, thus violating Rule 226 of the Central Excise Rules.

3. Imposition of Penalty
Penalties were imposed under various rules: Rs. 2,000/- under Rule 9(2), Rs. 1,000/- under Rule 52A(5), and Rs. 2,000/- under Rule 226 of the Central Excise Rules. The appellants argued that the discrepancies were due to human error and not intentional, citing the case of Hindustan Steel Ltd. v. State of Orissa, which allows for leniency in cases of technical or venial breaches. However, the Tribunal rejected this argument, referencing the case of Nizam Sugar Factory Ltd. v. Collector of Central Excise, which established that non-compliance with excise rules creates an absolute liability, regardless of intent.

4. Alleged Human Error in Stock Verification
The appellants claimed that the discrepancies were due to human error during stock verification, exacerbated by the heavy stock and recession in the market. They cited statements from their managers and argued that the physical verification was not conducted accurately. However, the Tribunal found no evidence to support this claim, noting that the appellants had signed the verification sheets without objection at the time. The Tribunal emphasized that the rules require accurate record-keeping and that the appellants' failure to do so attracted liability.

5. Compliance with Central Excise Rules
The Tribunal underscored the importance of compliance with the Central Excise Rules, 1944, which mandate proper record-keeping and procedures for the removal of excisable goods. The appellants' failure to maintain orderly records and the discrepancies found during verification were clear violations of these rules. The Tribunal stressed that these rules are designed to protect public revenue and must be strictly followed.

Conclusion
The appeal was dismissed, with the Tribunal upholding the demand for duty, the confiscation of excess goods, and the imposition of penalties. The Tribunal found no merit in the appellants' arguments regarding human error and emphasized the necessity of strict compliance with the Central Excise Rules.