1998 (2) TMI 267 - AT - Central Excise

Summary

Issues Involved:

1. Demand of duty on the shortage of five drums in the Bonded Store Room (B.S.R.).
2. Confiscation of 30 drums containing plasticisers.
3. Imposition of penalties under Rule 9(2) and Rule 173Q of Central Excise Rules, 1944.
4. Validity of the order due to the non-specification of the duty amount.

Issue-wise Detailed Analysis:

1. Demand of Duty on the Shortage of Five Drums in the Bonded Store Room (B.S.R.):

The Additional Collector directed the appellant to pay Central Excise duty on five drums found short in the Bonded Store Room. The appellant argued that the five drums found short had been taken out due to leaks and their contents transferred to other drums. However, the adjudicating authority did not accept this explanation, relying on the statement of the appellant's excise clerk, who initially could not provide a satisfactory explanation. The clerk later retracted his statement, claiming duress and coercion, but this retraction was made more than three years after the original statement. The Tribunal found the appellant's explanation inconsistent and upheld the finding that the appellant was liable to pay duty on the shortage of goods found in the Bonded Store Room.

2. Confiscation of 30 Drums Containing Plasticisers:

The Additional Collector confiscated 30 drums of plasticisers found unaccounted for in the finishing room, giving the appellant the option to redeem them on payment of a fine. The appellant contended that these drums were not fully manufactured and thus not accounted for in the RG 1 Register. The Tribunal noted inconsistencies in the appellant's defense, particularly regarding the practice of entering semi-finished goods in the RG 1 Register. However, due to the lack of clear evidence of irregularity and the fact that the goods were within the factory premises, the Tribunal extended the benefit of doubt to the appellant and set aside the confiscation and the related penalty.

3. Imposition of Penalties under Rule 9(2) and Rule 173Q of Central Excise Rules, 1944:

The Additional Collector imposed penalties of Rs. 1000 under Rule 9(2) and Rs. 10,000 under Rule 173Q. The Tribunal upheld the penalty under Rule 9(2) for the shortage of five drums but set aside the penalty under Rule 173Q related to the unaccounted 30 drums of plasticisers, given the benefit of doubt extended to the appellant regarding the manufacturing status of these drums.

4. Validity of the Order Due to Non-Specification of the Duty Amount:

The appellant argued that the order was invalid as it did not specify the duty amount. The Tribunal considered precedents, including a High Court of Bombay decision requiring the amount to be stated in the notice and order, and a Supreme Court decision suggesting that the absence of such details does not necessarily invalidate the notice. The Tribunal concluded that while it would have been appropriate for the Additional Collector to specify the duty rate, the lack of this detail did not render the order invalid. The matter was remanded to the adjudicating authority for quantification of the duty amount.

Conclusion:

The Tribunal upheld the demand for duty on the five drums found short and the penalty under Rule 9(2). It set aside the confiscation of 30 drums of plasticisers and the penalty under Rule 173Q, extending the benefit of doubt to the appellant. The order was remanded to the adjudicating authority for quantification of the duty amount. The appeal was partly allowed.