1999 (2) TMI 215 - AT - Central Excise

Summary

Issues:
- Confirmation of demand of duty and recovery of credit
- Imposition of penalty under Rule 173Q and Rule 57-I of the Central Excise Rules

Confirmation of demand of duty and recovery of credit:
The case involved M/s. Modi Rubber Ltd. appealing against an order passed by the Commissioner (Appeals), Ghaziabad, regarding discrepancies found during physical stock taking. The officers discovered shortages in finished goods and raw materials, along with discrepancies in maintaining records. The Asstt. Commissioner confirmed the duty demand and imposed penalties under various rules. On appeal, the Commissioner (Appeals) upheld the decision, emphasizing the seriousness of the allegations against the appellants. The appellant's representative argued that the physical stock taking was not thorough due to the size of stocks and staff issues. They also claimed that duty against shortages was debited promptly and no malafide intent was proven. Legal precedents were cited to support the argument that penalties should not be imposed in the absence of malafide intentions.

Imposition of penalty under Rule 173Q and Rule 57-I of the Central Excise Rules:
The Tribunal analyzed the imposition of penalties under Rule 173Q and Rule 57-I. It was noted that penalties under Rule 173Q do not require proof of malafide intent for certain clauses. The Tribunal concluded that penalties were justified under Rule 173Q due to contraventions of Central Excise Rules, even without malafide intentions. However, the penalty under Rule 57-I, equivalent to the disallowed credit, was deemed unjustified as no evidence of fraud or collusion was presented by the Revenue. The Tribunal reduced the penalty amount to Rs. 25,000 considering the circumstances and the gravity of the offense. Ultimately, the appeal was disposed of with the reduced penalty imposed on the appellants.