1997 (4) TMI 232 - AT - Central Excise

Summary

Issues:
1. Duty demand confirmation post rescinding of money credit scheme.
2. Dispute over the timing of entries in the RG 23B Part II entry book.
3. Imposition of penalty for contravention of Rule 173Q(1) (PP) of the Central Excise Rules.
4. Appellants' entitlement to credit on ethyl alcohol received before the rescinding of the money credit scheme.

Analysis:

1. The duty demand of Rs. 3,23,806/- was confirmed against the appellants after the rescinding of the money credit scheme post 1-4-1994. The appellants argued that entries in the RG 23B Part II entry book were made before 1-4-1994, entitling them to credit earned prior to the scheme's rescinding. They also contended that even if entries were made after 1-4-1994, they were entitled to credit as the ethyl alcohol was received before the scheme's rescinding. The penalty imposed for contravention of Rule 173Q(1) (PP) was challenged as unwarranted due to the absence of undue advantage gained.

2. The Department argued that entries made after the Inspector's remark on 1-4-1994 indicated false entries in the RG 23B Part II Register, justifying the penalty. The Collector upheld the penalty citing the absence of entries when the Inspector remarked on the scheme's end. The Department supported the confirmation of duty and penalty, urging dismissal of the appeal.

3. The Tribunal found that the appellants' entries were made before 1-4-1994 and that the ethyl alcohol was received prior to the scheme's rescinding, supported by State Excise documents. Citing the accrual of credit on goods received pre-rescinding, the Tribunal referenced a Supreme Court judgment and a prior Tribunal order in the appellants' favor. It held that the appellants were entitled to the credit earned on ethyl alcohol received before 1-4-1994, setting aside the duty demand and penalty.

4. The Tribunal's decision was based on the principle that the rescinding of the money credit scheme did not affect rights accrued by manufacturers prior to the scheme's end. The judgment emphasized that manufacturers could utilize accrued credit even after the scheme's lapse. The appellants' entitlement to credit on ethyl alcohol received before 1-4-1994 was upheld, aligning with legal precedents and prior Tribunal orders in similar cases.