1997 (7) TMI 339 - AT - Central Excise

Summary

Issues:
1. Appeal against order directing remand of case to Deputy Collector and penalty imposition on steel ingots for non-accountal in RG 1 Register.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved M/s. Hindustan General Industries Limited seeking to set aside the order of the Collector (Appeals) directing remand of their case to the Deputy Collector and challenging the penalty imposed on steel ingots due to non-accountal in the RG 1 Register. The appellant contended that the LPG cylinders they manufactured were highly regulated items, with specific raw materials obtained under BIS standards, and valves supplied by oil companies. The process of manufacturing LPG cylinders involved strict adherence to standards and testing procedures. The Assistant Collector found discrepancies during a visit to the factory, leading to the confiscation of LPG cylinders and steel ingots. The Deputy Collector confiscated the cylinders but allowed redemption on payment of a fine, while also imposing a penalty. The Collector (Appeals) upheld the liability regarding steel ingots but directed further investigation on the LPG cylinders, leading to the current appeal.

The appellant argued that the lower authorities failed to understand that the MS ingots were procured specifically for fabricating LPG cylinders for PSU oil companies and were not meant for sale in the open market. They highlighted that the manufacturing process was incomplete until pneumatic tests were conducted post-valve fitting. Reference was made to a Trade Notice stating that LPG cylinders need not be accounted for immediately in the RG 1 Register, awaiting BIS tests. The appellant also referenced a previous order by the Tribunal in their favor regarding the RG 1 stage for LPG cylinders and the absence of mala fide intent in the case of steel ingots. On the other hand, the JDR reiterated the findings of the lower authorities.

After considering the submissions and evidence, the Tribunal observed that the manufacturing and distribution of LPG cylinders were subject to stringent safety standards and regulatory oversight. It was noted that the LPG cylinders were not accounted for in the RG 1 Register due to pending BIS tests, as clarified in the Trade Notice. Consequently, the Tribunal set aside the Collector (Appeals) direction for remand by the Deputy Commissioner regarding the LPG cylinders. However, concerning the MS ingots, the Tribunal found the non-accountal in the RG 1 Register due to an employee's absence did not hold merit, establishing a contravention of Rule 226 of the Central Excise Rules. Therefore, liability on this ground was upheld.

In conclusion, the Tribunal modified the penalty imposed, reducing it from Rs. 15,000 to Rs. 2,000, based on the considerations and findings regarding the LPG cylinders and MS ingots. The impugned order of the Collector (Appeals) dated 30-9-1993 was disposed of accordingly.