1996 (7) TMI 297 - AT - Central Excise

Summary

Issues:
1. Incorrect classification of goods in declaration filed under Rule 57G.
2. Maintenance of a single account instead of separate accounts for production and clearance.
3. Allegations of duty evasion on goods less than 600 mm width.
4. Imposition of penalty on the appellants.

Analysis:
1. The case involved a dispute regarding the classification of goods by the appellants in their declaration under Rule 57G. The appellants had mistakenly shown the sub-headings of the inputs and final goods based on the Customs Tariff instead of the Central Excise Tariff. The department issued a show cause notice alleging incorrect classification, leading to duty demand and penalty imposition.

2. The appellants argued that the error in classification arose due to their mistake and that all inputs could be matched with the final products. They contended that the department neglected to consider the excess production of goods exceeding 600 mm width if alleging short accountal of goods less than 600 mm width. The appellants maintained that the production and clearance of goods less than 600 mm width were recorded in gate passes and RT 12 returns, indicating no loss of revenue due to maintaining a single RG 1.

3. The Revenue reiterated the allegations made in the Collector's order, emphasizing duty demand and penalty imposition for goods less than 600 mm width. However, the Tribunal found the appellants' arguments compelling, noting that the errors did not result in revenue loss. The Tribunal waived the requirement of pre-deposit of the confirmed duty amount but directed the appellants to deposit Rs. 3 lakhs towards the penalty within three months, with the remaining sum recovery being waived upon compliance.

4. The Tribunal acknowledged the strong case presented by the appellants, highlighting that the errors did not lead to revenue loss for the department. Despite significant irregularities, the Tribunal decided to dispense with the pre-deposit of the duty amount but imposed a penalty on the appellants. The appellants were directed to deposit Rs. 3 lakhs within three months, with the remaining amount being waived upon compliance, setting a deadline for the deposit and compliance reporting.