1998 (2) TMI 307 - AT - Central Excise

Summary

Issues:
1. Central Excise duty demand on goods found short.
2. Confiscation of flat bars found in excess.
3. Imposition of personal penalty.
4. Correct maintenance of accounts by the assessee.
5. Allegation of clandestine removal of goods.
6. Interpretation of tariff entry for flat bars of different dimensions.
7. Violation of Rule 226 of the Central Excise Rules.

Analysis:

1. The case involves the appeal filed by the Revenue against the order of the ld. Collector (Appeals) regarding the Central Excise duty demand on goods found short, confiscation of excess flat bars, and imposition of a personal penalty. The ld. Collector (Appeals) set aside the lower authorities' order and favored the appellants, who are re-rolling mills.

2. The respondents, re-rolling mills, were found with an excess of flat bars and rods below certain dimensions, along with a shortage of similar products. The Asstt. Collector demanded Central Excise duty on the goods found short, confiscated the excess flat bars, and imposed a personal penalty of Rs. 25,000. The ld. Collector (Appeals) overturned these decisions and ruled in favor of the appellants.

3. The appellant Commissioner argued that the shortage and excess were discovered after physical verification, and the respondents were maintaining various registers as required by law. The explanation provided for the discrepancies was attributed to a clerical mistake. The appellant contended that correct account maintenance is the responsibility of the assessee, and any violation of Rule 226 should be penalized.

4. The respondents' consultant argued that different widths of flat bars are considered the same commodity for tariff purposes, and the ld. Collector (Appeals) correctly determined that no penalty was warranted as there was no violation of the rules.

5. The judge noted the discrepancies in the stock and the maintenance of separate entries for flat bars of different dimensions by the respondents. The department failed to prove any clandestine removal of goods, and the tariff entry for flat bars below a certain thickness remained the same regardless of width. The partner of the firm admitted to incorrect maintenance of records, attributing the discrepancies to an employee's mistake.

6. Considering the lack of evidence supporting the allegation of clandestine removal and the admission of incorrect record-keeping by the assessee, the judge held that there was a contravention of Rule 226 of the Central Excise Rules. Consequently, a penalty of Rs. 2,000 was deemed sustainable in law, and the impugned order was set aside, allowing the appeal partially.

In conclusion, the judgment addressed the issues of Central Excise duty demand, confiscation, personal penalty, correct account maintenance, clandestine removal allegations, interpretation of tariff entries, and violation of Central Excise Rules. The decision favored the appellants on certain grounds while upholding penalties for rule violations.