1991 (3) TMI 230 - AT - Central Excise

Summary

Issues Involved:
1. Clandestine removal of 87.900 tonnes of duplex paper.
2. Discrepancy in production figures reported to different authorities.
3. Validity of penalty imposition in a separate adjudication order.
4. Maintenance of raw material accounts.
5. Applicability of the extended period for demand under Section 11A.
6. Functus officio principle in relation to the second adjudication order.

Detailed Analysis:

Issue 1: Clandestine Removal of 87.900 Tonnes of Duplex Paper
The Collector of Central Excise levied duty on the alleged clandestine removal of 87.900 tonnes of duplex paper during January to June 1985. The demand was based on discrepancies between figures reported to the Directorate General of Technical Development (DGTD) and those recorded in the RG 1 Register. The figures reported to DGTD were higher, indicating unaccounted production. The Tribunal found no infirmity in the Collector's conclusion, stating that the authenticity of the DGTD letter was not challenged.

Issue 2: Discrepancy in Production Figures Reported to Different Authorities
The production figures reported to DGTD for January to June 1985 were 231 tonnes, while the RG 1 Register showed 143.100 tonnes. The Chartered Accountant's certificate showed 203.10 tonnes for the same period. The Tribunal noted that the figures reported to DGTD were for obtaining a coal quota and were not necessarily aligned with those required for Central Excise purposes. However, the Tribunal emphasized that discrepancies needed satisfactory explanation, which the appellants failed to provide.

Issue 3: Validity of Penalty Imposition in a Separate Adjudication Order
The appellants argued that the Collector became functus officio after passing the first order on 23-6-1988 and could not issue a second order on 28-10-1988 imposing a penalty. The Tribunal held that there was no legal bar to treating the duty and penalty aspects separately. The first order confirmed the demand without prejudice to any action for imposing a penalty, hence the second order was valid.

Issue 4: Maintenance of Raw Material Accounts
The appellants were accused of not accounting for all raw materials received in their Form-IV register. They contended that some raw materials were sold as such and did not need to be recorded. The Tribunal found that proper accounts were not maintained, and the argument did not absolve the appellants from their responsibility under Central Excise Rules.

Issue 5: Applicability of the Extended Period for Demand under Section 11A
The Tribunal upheld the use of the extended period for demand, stating that suppression and misstatement of facts were evident. The discrepancy in production figures and the failure to maintain proper accounts justified invoking the extended period under the proviso to Section 11A.

Issue 6: Functus Officio Principle in Relation to the Second Adjudication Order
The appellants argued that the Collector was functus officio and could not issue the second order. The Tribunal rejected this argument, noting that the penalty aspect was reserved in the first order. The Tribunal also drew an analogy with its own practice of issuing separate orders on jurisdiction and merits, concluding that no prejudice was caused to the appellants by the separate order.

Conclusion:
The Tribunal dismissed the appeals, affirming the Collector's orders. The discrepancies in production figures and improper maintenance of accounts justified the demand and penalty. The extended period for demand was applicable due to evident suppression of facts, and the separate adjudication order for penalty was legally valid.