1996 (8) TMI 191 - AT - Central Excise

Summary

Issues:
Challenge to order-in-original by the appellants regarding duty payment, penalty, and confiscation of seized sugar. Interpretation of Rule 92B of the Central Excise Rules, 1944 regarding the operation of centrifugals in a Khandsari factory. Legal validity of the seizure of sugar by Central Excise officers.

Analysis:
The appellants contested the order-in-original by the Collector, Central Excise, challenging duty payment, penalty, and seizure of sugar. The officers found two centrifugals operating in the Khandsari factory, contrary to the declared one centrifugal. The appellants failed to produce excise records and proof of duty payment for the sugar manufactured by the second centrifugal. A show cause notice was issued, leading to the Collector's decision imposing duty and penalty. The appellants appealed to the CBEC, which remanded the case for re-examination. The Collector re-evaluated the matter and upheld the duty demand and penalty.

The appellants argued against the legality of the sugar seizure, timing of sample drawing, and misinterpretation of Rule 92B. They contended that the duty demand for two centrifugals for the entire season was erroneous. The appellants' counsel cited the Allahabad High Court decision to support their case.

The Respondent, the learned SDR, argued that Rule 92B allowed duty calculation based on unit closure, not individual centrifugals. He highlighted the importance of the term 'unit' in the rule and the requirement for prior permission to change centrifugals. The SDR maintained that duty for the entire season was justified due to non-compliance with sub-rule (2A) of Rule 92B.

After considering the arguments, the Tribunal observed discrepancies in the Sector Officer's endorsements regarding the number of working centrifugals. The Tribunal noted the Collector's satisfaction that only one centrifugal was operational until 6-10-1977. Referring to explanation (b) of Rule 92B, which excludes closed centrifugals from duty calculation, the Tribunal limited duty payment for the second centrifugal from 6-10-1977 to 31-10-1977. The Tribunal upheld other aspects of the Collector's decision based on the Allahabad High Court's precedent.

In conclusion, the Tribunal modified the impugned order, limiting duty payment for the second centrifugal and confirming other findings. The appeal was disposed of accordingly, addressing the issues raised by the appellants and the Respondent.