1990 (1) TMI 224 - AT - Central Excise

Summary

Issues:
Manufacture of valves for gas cylinders, Seizure of valves by Central Preventive Organisation, Alleged contravention of Central Excise Rules, Confiscation of seized valves, Provisional release of goods, Adjudication by Deputy Collector, Appeal to Collector of Central Excise, Requirement of ISI inspection for marketability, Entry in R.G. 1 Register, Legal validity of seizure and confiscation.

Analysis:

The appellants, engaged in manufacturing valves for gas cylinders, including spare parts, had 422 pieces of Chlorine Gas Cylinder Valves seized by the Central Preventive Organisation for not being accounted for in the R.G. 1 Register, despite being fully manufactured. A show cause notice was issued for contravention of Central Excise Rules, leading to adjudication by the Deputy Collector who confiscated the valves under Rule 173Q. The Collector of Central Excise (Appeals) upheld the confiscation, citing the need for immediate entry of manufactured valves in the register, as per a previous decision. The appellants contested, arguing that the valves were seized before completion, requiring ISI inspection for marketability, as per Gas Cylinder Rules, 1981. They highlighted the two-stage ISI inspection process and the legal requirement for certification before market entry.

During the hearing, the appellants' counsel emphasized that the valves were seized before being fully manufactured and marketable, as they were yet to undergo safety checks, ISI inspection, and certification. They pointed out the mandatory nature of ISI inspection under Gas Cylinder Rules, 1981, and argued that without certification, the valves were not ready for market entry. The counsel referenced past tribunal and court decisions to support the contention that marketability was contingent upon ISI inspection, not immediate entry in the register.

The departmental representatives countered, asserting that the valves were fully manufactured before ISI inspection and should have been entered in the register beforehand. They relied on a previous decision to support their stance, suggesting that post-inspection reprocessing was an option if any piece was rejected. The representatives presented documents indicating delivery before inspection certificates, challenging the appellants' argument regarding the sequence of events and the necessity of ISI inspection for spare parts.

Upon review, the tribunal examined the Gas Cylinder Rules, 1981, emphasizing the mandatory nature of ISI inspection for marketability. They concluded that the seized valves were not liable for confiscation, as market entry was contingent upon ISI inspection, rendering the seizure and confiscation illegal. Consequently, the tribunal set aside the lower authorities' orders and allowed the appeal, in favor of the appellants.