1997 (12) TMI 426 - AT - Central Excise

Tobacco - Goods liable to confiscation - Notification No. 356/86-C.E. - Demand - Limitation

Summary

Issues Involved:
1. Duty demand and penalty imposition.
2. Non-accountal of cut tobacco.
3. Compliance with Chapter X procedures.
4. Validity of the appellants' records and explanations.
5. Time-bar contention.

Detailed Analysis:

1. Duty Demand and Penalty Imposition:
The Commissioner of Central Excise, Raipur, confirmed a duty demand of Rs. 32,38,659/- and imposed a penalty of Rs. 3,50,000/- against the appellants. The appellants were found to have not used 39,780 kgs. of cut tobacco in the manufacture of machine-rolled cigarettes as declared, and failed to furnish a satisfactory account of the said quantity.

2. Non-accountal of Cut Tobacco:
During an inspection on 20-9-1993, it was discovered that the appellants had not satisfactorily accounted for 39,780 kgs. of cut tobacco as required under Rule 192. The appellants contended that this quantity was 'wet scrap' generated during the slitting of waste cigarettes, which was recorded in Appendix-E Register. However, the Commissioner found that the appellants had disposed of the 'wet scrap' without proper intimation or permission from the Department, violating Chapter X procedures.

3. Compliance with Chapter X Procedures:
The Commissioner emphasized that under Chapter X procedures, waste/refuse obtained must be stored separately and disposed of only with the proper officer's permission. The appellants failed to produce the 'wet scrap' for inspection and physical verification, which was a serious violation of Central Excise Rules. The Commissioner rejected the appellants' plea that the 'wet scrap' was used for retrieving good tobacco, as there was no evidence of such usage or proper record-keeping.

4. Validity of the Appellants' Records and Explanations:
The appellants argued that they maintained proper records as per the Cigarette Manual and Appendix-E Register. They claimed that the 'wet scrap' was recorded and authenticated by the Excise Officer. However, the Commissioner found discrepancies in the appellants' records, including wide variations in the percentage of 'wet scrap' generated and the lack of proper explanation for these variations. The appellants' explanation that 'wet scrap' was mentioned instead of 'oily tobacco' was not convincing.

5. Time-Bar Contention:
The appellants contended that the demand was time-barred. However, the Commissioner and the Tribunal held that Rule 196 does not import the limitation period under Section 11A. The Tribunal cited previous decisions to support this view, confirming that the demand under Rule 196 was not subject to the time-bar provisions of Section 11A.

Conclusion:
The Tribunal upheld the Commissioner's order, confirming the duty demand and penalty. The appellants' explanations and records were found inadequate and inconsistent with the requirements under Chapter X procedures. The Tribunal dismissed the appeal, finding no merit in the appellants' claims regarding the non-accountal of cut tobacco and the time-bar contention.