1995 (3) TMI 232 - AT - Central Excise

Summary

Issues:
1. Competency of Additional Collector to adjudicate under Section 11A of Central Excises Act.
2. Alleged clandestine manufacturing and removal of polybags.
3. Non-accountal of granules in statutory records.
4. Liability for duty and penalty.

Competency of Additional Collector:
The appellant raised an objection regarding the competency of the Additional Collector to adjudicate under Section 11A of the Central Excises Act, arguing that only the Collector should have adjudicated the matter. The Tribunal noted that the term "Collector" under the Act includes "Additional Collector" as per the Central Excise Rules. Previous judicial pronouncements supported this interpretation, establishing that the Additional Collector could adjudicate in cases invoking the longer period of limitation. The Tribunal upheld the competency of the Additional Collector in this matter.

Alleged Clandestine Manufacturing and Removal:
The case revolved around the allegation of clandestine manufacturing and removal of polybags by the appellants. The authorities claimed that the appellants did not account for 21,625 kgs. of granules used in manufacturing polybags, leading to duty demand and penalties. The appellants argued that they borrowed granules for business purposes, returned a portion, and used the rest for manufacturing tapes. The Tribunal analyzed the evidence, including statements and lack of excess production proof, and found that the charge of clandestine removal based solely on non-accountal of granules was not substantiated. The benefit of the doubt was given to the appellants regarding the 18,000 kgs. of granules.

Non-Accountal of Granules:
The appellants admitted to consuming 3,625 kgs. of granules without accounting for them in statutory records. The Tribunal held the appellants liable for duty and penalties concerning this quantity. However, regarding the 18,000 kgs. of granules taken on loan, the Tribunal found discrepancies in the lower authority's reasoning. The appellants' explanation of fear of multi-point sales tax for not recording these granules was considered, and the Tribunal concluded that the evidence did not conclusively prove clandestine manufacturing and removal of finished products without duty payment.

Liability for Duty and Penalty:
Ultimately, the Tribunal reduced the penalty imposed on the appellant firm to Rs. 2,000 considering the circumstances of the case. Since the appeal was by the firm and not the individual partners, no separate penalty order was made for the partners. The Tribunal disposed of the appeal in favor of the appellants, granting them the benefit of the doubt concerning the non-accountal of 18,000 kgs. of granules and reducing the penalty accordingly.