1998 (6) TMI 130 - AT - Central Excise

Summary

Issues:
1. Demand of Central Excise duty and penalty on the appellant for manufacturing and clearing cement without payment of appropriate duty.

Analysis:
The appeal before the Appellate Tribunal was against the Order-in-Original passed by the Collector of Central Excise, Jaipur, demanding Central Excise duty and imposing a penalty on the appellant for allegedly manufacturing and clearing cement without paying the appropriate duty. The appellant was procuring non-duty paid clinker from manufacturers and clearing cement manufactured from it along with gypsum. The duty leviable on cement manufactured from outside clinker was different from that produced in the appellant's factory. The Collector found a shortage of clinker during a stock check, leading to the allegation that the clinker was used in cement production without accounting for it or paying duty. The appellant admitted the shortage and deposited the differential duty amount. The Collector demanded further duty and imposed a penalty, which was contested by the appellant. The appellant claimed the shortage was due to mistakenly using procured clinker instead of their own in cement production, leading to a lower duty payment.

The arguments presented by both sides revolved around the separate accounting of materials received under Chapter X Procedure and the alleged misuse of outside clinker in cement production without paying the appropriate duty. The appellant claimed the shortage was due to using the procured clinker in manufacturing cement, albeit at a lower duty rate, while the Collector contended that the clinker was used clandestinely in cement production without duty payment. The Tribunal examined the provisions of Chapter X and the appellant's statements regarding the use of outside clinker. The Managing Director admitted the mistake in discharging duty liability and deposited the differential duty amount. The Tribunal noted that the appellant's production of cement could involve a time gap between procurement of clinker, giving the benefit of doubt to the appellant's explanation regarding the shortage of procured clinker.

The Tribunal ultimately set aside the part of the Collector's order demanding differential duty after considering the amount already deposited by the appellant. Regarding the penalty imposed, the Tribunal found it justified given the circumstances and the amount of duty involved. The penalty was deemed not disproportionate or excessive, leading to the decision not to interfere with this aspect of the Collector's order. Consequently, the Tribunal partly allowed the appeal by setting aside the duty demanded while upholding the penalty imposed.