1993 (1) TMI 181 - AT - Central Excise

Summary

Issues: Appeal against order-in-appeal, Allegation of duty non-payment, Time bar defense, Discrepancy in production report, Double payment of duty, Clandestine removal, Penalty imposition, Factory records audit, Excess production clearance, Bag stitching explanation, Benefit of doubt.

1. Appeal against order-in-appeal:
The judgment pertains to an appeal against the order-in-appeal AMP-773/PN-353/87 dated 8-6-1988. The appellants, who are manufacturers of sodium bi-chromate, contested a demand for payment of duty amounting to Rs. 19,845. The appeal was brought before the Tribunal after the Collector (Appeals) upheld the demand.

2. Allegation of duty non-payment:
The officers alleged that 12 M.Ts. of sodium bi-chromate were not accounted for in the production report dated 7-9-1981, despite a report showing 22 M.Ts. The demand for duty payment was based on this discrepancy. The Department contended that the scrutiny of private records in 1983 revealed a suppression of production, justifying the demand.

3. Time bar defense:
The appellants raised a time bar defense, arguing that the error in production was made on 7-9-1981, while the show cause notice was issued on 2-1-1985, rendering the demand time-barred. They also claimed that the incorrect production report was brought to the notice of proper officers and stock-taking officers, with a suitable remark made on the report.

4. Discrepancy in production report and double payment of duty:
The appellants asserted that the production report for 7-9-1981 incorrectly showed 22 M.Ts., with only 10 M.Ts. accounted for, and the remaining 12 M.Ts. were cleared on 11-9-1981. They argued that demanding duty on the unaccounted 12 M.Ts. would result in double payment for the same goods.

5. Clandestine removal, penalty imposition, and factory records audit:
The Tribunal noted that although the factory records were audited in 1983, the demand was made in 1985 without any penalty imposed, despite the allegation of clandestine removal. The absence of evidence showing the clearance of the excess production and the explanation provided by the appellants regarding the timing of accountal after bag stitching led to the acceptance of their explanation. The Tribunal emphasized that this was a solitary case, and the possibility of error in the production report could not be ruled out, thus granting the benefit of doubt and allowing the appeal.