1995 (12) TMI 151 - AT - Central Excise

Summary

Issues:
1. Duty demand and penalty imposed by the Collector of Customs and Central Excise, Chandigarh.
2. Allegations of clandestine removal of goods and irregularities in maintaining RG 1 register.
3. Discrepancies in the rate of duty applied for computing the demand.
4. Reduction of penalty imposed on the appellant.

Analysis:

1. The appeal challenged the order by the Collector demanding duty of Rs. 6,34,105.97 and imposing a penalty of Rs. 1,50,000 on the appellants. The appellants, who manufacture electrical switch gears, were accused of clandestine removal of goods and irregularities in maintaining the RG 1 register.

2. The Department alleged that the appellants removed excess goods not accounted for in the register and disguised their own production as goods purchased from another company. The appellants argued that the goods were supplied against specific purchase orders subject to inspection and were fully documented. They contended that the charge of clandestine removal lacked material evidence and cited case laws to support their defense.

3. The Department supported its case by stating that irregularities in accounting unauthorised clearances were proved with evidence. The Inspecting Officer's statements indicated that goods were fully finished at the time of inspection, contradicting the appellants' claim. The Department also claimed that goods supposedly manufactured by another company actually belonged to the appellants.

4. The Tribunal upheld the irregular maintenance charge of the RG 1 account based on evidence. It found that goods were fully finished during inspection and that some production from another company was removed by the appellants. The Tribunal directed the Collector to re-compute the duty demand based on the correct application of the rate of duty. The penalty imposed was reduced from Rs. 1,50,000 to Rs. 50,000 due to lack of established clandestine removal.

This judgment highlights the importance of maintaining accurate records, following proper procedures in manufacturing and inspection, and ensuring the correct application of duty rates in excise matters.