1990 (11) TMI 258 - AT - Central Excise

Summary

Issues:
1. Challenge against the order of confiscation and imposition of penalty by the Collector of Central Excise, Calcutta.
2. Alleged excess quantity of labelled biris and shortage of unlabelled biris.
3. Appeal for setting aside the impugned order and plea for redemption of confiscated biris without fine.
4. Examination of discrepancies in the stock and proper recording of production in statutory registers.
5. Legal principles applicable to the case and justification for the Collector's order.
6. Consideration of the appeal, setting off excess labelled biris with shortage of unlabelled biris, and refund of excess duty paid.

Analysis:

The appeal before the Appellate Tribunal CEGAT, Calcutta, involved a challenge against the order of confiscation and penalty imposed by the Collector of Central Excise, Calcutta. The appellants, M/s. Sk. Nasiruddin Biri Merchants Pvt. Ltd., contested the findings of the Collector regarding the alleged excess quantity of labelled biris and shortage of unlabelled biris. They argued that the discrepancies were due to the continuous change in production stages and the failure of the Department to consider their production practices. The appellants maintained that the penalty imposed was unwarranted as no offense had been committed, and no mens rea was established.

During the hearing, the appellants' representative elaborated on their contentions, emphasizing that the alleged excess labelled biris had not reached marketable lots and were not entered in the statutory registers due to their packing practices. On the other hand, the J.D.R. for the respondent Collector supported the order, citing admissions by the appellants' managers and relying on previous cases to justify the Collector's decision.

The Tribunal considered the submissions and perused the appeal records, noting that the appellants had also filed a writ in the High Court of Calcutta, resulting in the redemption of confiscated biris upon payment of duty. The Tribunal found merit in the appellants' argument that the seizure of labelled biris was premature as they had not reached marketable stages based on their packing practices. The Tribunal criticized the Collector for not verifying the appellants' production practices before rejecting their plea, emphasizing the Department's responsibility to understand the production and accounting system.

Regarding the legal principles cited by the J.D.R., the Tribunal found them inapplicable to the present case, as the appellants' explanations for discrepancies were not properly examined. The Tribunal highlighted that the appellants' statements did not admit to clandestine activities but rather explained their recording practices based on marketable units of packing.

Ultimately, the Tribunal allowed the appeal, ordering the appellants to pay duty on the net difference of unaccounted biris after setting off the excess labelled biris with the shortage of unlabelled biris. The Tribunal also directed a refund of excess duty paid and set aside the penalty and fine in lieu of confiscation. The Cross Objection filed by the Department was disposed of in line with the Tribunal's decision, emphasizing the proper examination of the appellants' contentions in the adjudication process.