1992 (2) TMI 228 - AT - Central Excise

Issues Involved:
1. Shortage of Goods
2. Allegation of Clandestine Removal
3. Limitation Period for Duty Demand
4. Imposition of Penalty

Issue-wise Detailed Analysis:

1. Shortage of Goods:
The central issue revolves around the verification of statutory records by Central Excise officers, which revealed a shortage of 1287.083 MT of goods against the recorded balance in the RG-1 register. The appellants failed to provide a satisfactory explanation for this discrepancy. They later requested the removal of this quantity from the RG-1 register, claiming it was erroneously recorded. However, the Central Excise officers reasonably believed that the goods were removed from the factory without proper determination and payment of Central Excise duty, leading to an alleged duty evasion of Rs. 2,83,158.26.

2. Allegation of Clandestine Removal:
The Show Cause Notice issued to the appellants alleged violations of multiple Central Excise Rules, including Rule 9(1) read with Rule 173F, Rule 52A, Rule 53 read with Rule 173G(4), Rule 54 read with Rule 173G(3), Rule 173B, Rule 173G(5), and Rule 226. The specific allegations included the removal of 1287.083 MT of Castings of Steel without proper determination and payment of duty, without issuance of Central Excise Gate Passes, and without proper accountal in statutory records. The appellants argued that the goods were not removed from the factory and were still available for further processing. However, during joint stock verification, only 150.045 MT of Castings could be correlated, leaving a discrepancy of 1137.038 MT, which the adjudicating authority concluded were removed without payment of duty.

3. Limitation Period for Duty Demand:
The appellants contended that the demand was barred by limitation, arguing that the Show Cause Notice did not allege clandestine removal with intent to evade duty, making the extended period of limitation inapplicable. They cited several Tribunal decisions to support their contention. However, the respondents argued that the Show Cause Notice, when read as a whole, did allege clandestine removal with intent to evade duty, justifying the extended period of limitation. The Tribunal agreed with the respondents, finding that the allegations of suppression and clandestine removal were inherent in the language of the Show Cause Notice and supported by evidence, thus making the extended period applicable.

4. Imposition of Penalty:
The appellants also contended that the penalty was not sustainable as the duty demand was barred by limitation. However, the Tribunal held that since the demand was not time-barred and the allegations of clandestine removal were established, the imposition of a penalty of Rs. 2,000/- was justified. The Tribunal relied on past decisions where similar circumstances led to the confirmation of penalties for clandestine removal and evasion of duty.

Conclusion:
The Tribunal dismissed the appeal, upholding the duty demand of Rs. 2,50,148.36 NP and the penalty of Rs. 2,000/-. The judgment emphasized that the Show Cause Notice sufficiently alleged suppression of facts and clandestine removal with intent to evade duty, thus justifying the extended period of limitation and the imposition of penalties.

← Previous Next →