1994 (12) TMI 201 - AT - Central Excise

Summary

Issues involved:
Appeal against Order-in-Appeal No. T-465/BRD-416/85 and Order-in-Appeal No. T-466/BRD-417/85 regarding penalty imposition and duty demand under Rule 173Q and Rule 226 of the Central Excise Rules, 1944.

Issue 1: Appeal E/127/86
The appeal challenged the penalty imposition and duty demand under Rule 173Q of the Central Excise Rules, 1944, based on discrepancies in production records and alleged duty evasion.

The factory premises were inspected, revealing discrepancies between the production figures in a private Note Book and the RG 1 Register. The partner of the appellant firm initially admitted to the unaccounted production and paid the duty but later retracted the statement. The appellants contested the show cause notices, claiming coercion in obtaining the admission and justifying the re-credit entry in their PLA.

The adjudicating authority upheld the penalty and duty demand, which was confirmed by the appellate authority. The appellants argued that the private Note Book was not a reliable source for production figures and cited previous tribunal decisions to support their case.

Issue 2: Appeal No. E/128/86
This appeal contested the debit entry and penalty imposed under Rule 226 of the Central Excise Rules, 1944, related to the re-credit entry made in the PLA without departmental permission.

The Ld. Advocate for the appellants argued that the debit entry was made under compulsion, leading to the subsequent re-credit entry. The Ld. SDR supported the orders, emphasizing the partner's admission and the breach of norms by the appellants.

The tribunal found that the allegations of excess and unaccounted production were solely based on the private Note Book, while the stock matched the entries in the RG 1 Register. The tribunal also noted discrepancies between the production figures in the private Note Book and the RG 1 Register, casting doubt on the authenticity of the former.

The tribunal concluded that without substantial evidence of unrecorded production and clandestine removal, the penalty and duty demand in Appeal E/127/86 were set aside. However, the contravention of Rule 226 in Appeal No. E/128/86 was upheld, leading to the confirmation of the penalty imposed.

In summary, Appeal No. 127/86 was allowed, setting aside the order appealed against, while Appeal No. 128/86 was partly allowed, confirming the penalty of Rs. 1500 imposed under Rule 226 of the Rules.