1991 (1) TMI 296 - AT - Central Excise

Summary

Issues Involved
1. Validity of gate passes and date discrepancies.
2. Seizure of unaccounted goods in the factory.
3. Alleged clearance of goods without payment of duty.
4. Assembling versus manufacturing of tape recorders.

Detailed Analysis

1. Validity of Gate Passes and Date Discrepancies
The primary issue revolves around the gate pass dated 30-6-1984 used to transport goods on 27-9-1984. The legal position that a gate pass is valid only for the date of issue is undisputed. Thus, the gate pass was not valid for the transport date, indicating a violation of the rules. The appellants attributed the delay to delayed inspection and provided supporting documents, which were not contested by the department. The Tribunal found the explanation plausible and held that the use of the gate pass was not intended to evade duty but was a serious administrative lapse. Consequently, no duty was demandable, but a penalty was warranted.

2. Seizure of Unaccounted Goods in the Factory
The issue here is whether the goods were at the RG-1 stage, which requires entry into the register. The appellants argued that the goods were incomplete and awaiting mandatory inspection, as per the contract. The department did not provide evidence to contradict this. The Tribunal noted that the practice of entering goods in RG-1 before inspection was not established. Given the contractual requirement for inspection, the Tribunal attributed no mala fides to the appellants and granted them the benefit of the doubt.

3. Alleged Clearance of Goods Without Payment of Duty
The appellants admitted delays in dispatch and discrepancies in gate passes but argued that duty had been paid in advance, and there was no intent to evade duty. The Tribunal found that the department failed to provide evidence of duty evasion or unauthorized clearances. The Tribunal held that the goods were not covered by a valid gate pass, amounting to a serious administrative lapse but not warranting a demand for duty.

4. Assembling versus Manufacturing of Tape Recorders
Initially, the appellants denied manufacturing the tape recorder, claiming it was imported. However, they later admitted to assembling it within the factory. The Tribunal noted this change in stance and remanded the matter to the Collector for re-examination, emphasizing that assembling components also amounts to manufacturing, requiring proper documentation and duty payment.

Conclusion
1. The confiscation of goods and the consequential redemption fine were set aside.
2. The demand for duty was quashed.
3. The penalty was reduced from Rs. 25,000 to Rs. 20,000.
4. The matter concerning the tape recorder was remanded for de novo consideration.