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Issues Involved:
1. Excess stock found in the factory. 2. Alleged removal of goods without payment of Central Excise duty. 3. Appropriation of security and imposition of penalty. Issue-Wise Detailed Analysis: 1. Excess Stock Found in the Factory: The Preventive Officers of the Central Excise Headquarters Office discovered 41 cartons in excess over the recorded balance in R.G. 1 during their visit to the appellant's factory. They also found additional stocks of detergent cakes and Tata's 501 bar at other locations within the factory. The officers seized three private registers showing daily production and a labor attendance register. The department alleged that the production details in these registers were not carried over to the R.G. 1, indicating that the appellants had cleared goods without payment of Central Excise duty. 2. Alleged Removal of Goods Without Payment of Central Excise Duty: The department issued a show cause notice alleging contravention of multiple Central Excise Rules. The Collector adjudicated that the appellants were showing stock in R.G. 1 at a stage when the goods were packed in cartons, a practice approved by the jurisdictional Assistant Collector. However, the Collector did not accept the appellants' plea regarding the 472 cartons found in excess, determining that these cartons were fit for entry in R.G. 1. The Collector upheld the contravention of Rules 53, 173G, and 226 for these cartons and appropriated Rs. 5,000/- from the security for the bond, imposing an additional penalty of Rs. 1,000/- under Rule 173Q. 3. Appropriation of Security and Imposition of Penalty: The appellants argued that the detergent cakes found outside the bonded store room were not ready for accounting in the R.G. 1 register, as many were not wrapped, sealed, or counted. The Collector, however, found that the 472 cartons were taped and sealed, making them fit for entry in R.G. 1. The Collector's decision to appropriate Rs. 5,000/- from the security and impose a Rs. 1,000/- penalty was upheld. Additional Findings on Alleged Clandestine Removal: The Collector found that 7,800 cartons of 501 bars were duly accounted for, dropping the charge of clandestine removal for these bars. However, the charge of removal of detergent cakes (250 gms and 125 gms) without payment of duty was upheld. The appellants contended that the production shown in private records included incomplete and unsorted material, which was not ready for entry in R.G. 1. The Collector did not accept this defense, demanding duty of Rs. 7,77,460.93 and imposing a penalty of Rs. 60,000/-. Final Judgment: The Tribunal found that production could not be accurately determined from private accounts, as their purposes were different. The Tribunal held that the evidence was insufficient to conclude that the production shown in private records was not included in R.G. 1 and had been clandestinely removed. Consequently, the demand of duty and the imposition of penalty were not sustainable. The appeal was disposed of accordingly.
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