1997 (9) TMI 232 - AT - Central Excise

Issues Involved:
1. Manufacture and clandestine clearance of aluminium cops.
2. Excess sale of scrap.
3. Undervaluation of scrap.
4. Manufacture and clandestine clearance of steel cops.

Detailed Analysis:

1. Manufacture and Clandestine Clearance of Aluminium Cops:
The appellant was accused of manufacturing aluminium cops from unaccounted aluminium rods and clearing them without paying duty. The show cause notice cited discrepancies in the quantity of aluminium rods received and consumed, as recorded in various statements and registers. The appellant contended that these discrepancies were due to clerical errors and double entries. The Collector rejected these explanations, but the Tribunal found the appellant's explanations reasonable and probable. It was noted that the Collector did not verify the appellant's claims adequately. The Tribunal concluded that the difference in the quantity of aluminium rods should be reduced by 42.201 MTs, as the Collector's rejection of the appellant's explanation was unjustified.

2. Excess Sale of Scrap:
The show cause notice alleged that the appellant sold 96.525 MTs of aluminium scrap, whereas only 56.201 MTs were shown in statutory records, indicating a clandestine clearance of 40.324 MTs without payment of duty. The appellant argued that the discrepancy was due to an erroneous reference in the statement sent to the Head Office and provided an audited statement to reconcile the figures. However, the Collector rejected this explanation, citing the lack of independent evidence and the improbability of receiving duty-paid scrap from another factory for trading purposes. The Tribunal agreed with the Collector, finding the explanation about the discrepancy unconvincing and supporting the finding of clandestine clearance of aluminium scrap.

3. Undervaluation of Scrap:
The appellant declared the price of scrap as Rs. 11.95 per kg. in statutory records. However, a confidential internal document suggested that the real price was Rs. 20/- per kg., and the lower price was declared to avoid excise intervention. The Collector relied on this document to determine the value at Rs. 20/- per kg. The appellant's reference to a Kota Debit Note was deemed insufficient without the actual document. The Tribunal upheld the Collector's finding of undervaluation, agreeing that the internal document was sufficient evidence of the real price.

4. Manufacture and Clandestine Clearance of Steel Cops:
The show cause notice indicated a discrepancy between the recorded and actual quantities of steel cops, suggesting clandestine clearance. The appellant claimed that the discrepancy was due to a misrecorded consignment from J.C.T. Ltd. for repair, which included both aluminium and steel cops. The Collector rejected this explanation, viewing the supporting documents as afterthoughts. The Tribunal agreed with the Collector, noting the lack of timely record adjustments and supporting evidence. The appellant failed to establish the explanation satisfactorily, and the finding of clandestine removal of steel cops was upheld.

Conclusion:
The Tribunal set aside the Collector's finding regarding the manufacture of aluminium cops from 44.077 MTs of rods and their clandestine clearance. However, it confirmed the other findings and remanded the case for further decision on the availability of the benefit of Notification No. 182/84 concerning scrap and for the quantification of duty, redemption fine, and penalty. The appeal was allowed in part.

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