1998 (3) TMI 416 - AT - Central Excise

Issues Involved:

1. Shortage of stock during physical verification.
2. Non-debit of duty on cleared goods.
3. Demand of duty based on production cards.
4. Demand of duty based on power consumption register.
5. Demand of duty based on raw material challans.
6. Demand of duty based on production cards.
7. Calculation of production based on power consumption.
8. Penalty imposed.
9. Cross-examination of individuals.
10. Retraction of statements.

Detailed Analysis:

1. Shortage of Stock During Physical Verification:

The physical verification of the stock revealed shortages. The RG 1 Register was updated only till 12-2-1991, while the officers visited the factory on 14-2-1991. The shortage of 24.376 MT was confirmed, and the finding in the impugned order was upheld.

2. Non-Debit of Duty on Cleared Goods:

The explanation provided by the appellant regarding the clearance of 6.1 MT duplex board without debiting the duty was found unacceptable. Consequently, the duty amounting to Rs. 2,168.06 was correctly confirmed.

3. Demand of Duty Based on Production Cards:

The demand of duty on 73.631 MT duplex boards was based on production cards dated 2-2-1991, 3-2-1991, 11-2-1991, and 13-2-1991. The figures were corroborated by the machine log books. The appellant's argument that these records were not maintained under management orders was insufficient to disprove their validity. Therefore, the duty demand was upheld.

4. Demand of Duty Based on Power Consumption Register:

For the 407.502 MT of duplex boards, the figure was derived from the Power Consumption Register, which included daily power consumption and production figures for 39 days. The discrepancy between the recorded production (155.190 MT) and actual production (562.792 MT) indicated a shortfall of 407.502 MT. The appellant's explanations were deemed insufficient, and the duty demand was upheld.

5. Demand of Duty Based on Raw Material Challans:

The demand of duty on 43.800 MT of duplex boards was based on the assumption that 80 kgs of duplex boards were produced from 100 kgs of waste paper, derived from 18 raw material challans not accounted for in the Form IV Register. Since there was no evidence of actual conversion and removal of these materials, the demand of duty was not sustainable and was dismissed.

6. Demand of Duty Based on Production Cards:

The production cards indicated an excess production of 35.09 MT of duplex boards over the recorded balance in the RG 1 Register. Despite the appellant's claim that these cards were not maintained under management orders, the employee's statement confirmed their maintenance. Thus, the demand of Rs. 12,452.90 was upheld.

7. Calculation of Production Based on Power Consumption:

The production for the periods alleged in the Show Cause Notice was calculated based on average production and power consumption. The Power Consumption Register, maintained for 39 days, provided a reliable basis for determining the norm of production. The demand of duty on 256.315 MT for February 1990 to March 1990 and 3899.557 MT for April 1990 to 31-2-1991 was upheld.

8. Penalty Imposed:

The quantum of the penalty was deemed too high. Considering the facts and evidence, the penalty was reduced to Rs. 10 lakh.

9. Cross-Examination of Individuals:

The appellant's request for cross-examination of individuals explaining the entries in the records was denied. It was held that the records were self-explanatory, and the denial did not result in a miscarriage of justice.

10. Retraction of Statements:

The retraction of statements was viewed as an afterthought and a mere formality. The statements were considered explanations of records, and retraction did not alter their validity.

Conclusion:

Except for the reduction in the penalty amount and dismissal of the duty demand on 43.800 MT of duplex boards, the impugned order was upheld. The appeal was disposed of accordingly.

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