1998 (4) TMI 350 - AT - Central Excise

Summary

Issues:
Waiver of deposit of duty and penalty imposed on the assessee and Deputy General Manager.

Analysis:
The advocate for the applicants argued that the demand for duty was unsustainable due to various reasons. They highlighted that discrepancies in stock inputs are inevitable due to the large volume of inputs received for manufacturing motor vehicles. The advocate contended that the Department should have deducted excess inputs from the total shortage to determine the credit to be reversed. They also pointed out discrepancies in the duty rates applied by the Department, which led to an inflated credit reversible amount. Regarding penalties, it was argued that there was no willful intent to evade duty, and hence, penalties should not be levied without proper application of Rule 209A.

The Departmental Representative countered by stating that the applicant failed to show that credit had not been taken on inputs received without payment of duty. They argued that if inputs for which credit was taken were not utilized in manufacturing finished products, the credit must be reversed. The Department highlighted that shortages were discovered only after their intervention, indicating a lack of transparency on the part of the applicants. They justified the imposition of penalties on both the first and second applicants for maintaining inaccurate Central Excise accounts.

The Tribunal acknowledged the challenges in maintaining accurate records of a large number of inputs but emphasized the necessity for periodic stocktaking to address discrepancies. They found the demand for duty prima facie established, considering the volume and variety of inputs received. The Tribunal noted discrepancies in duty rates applied by the Department and the classification of inputs under motor vehicle parts. They reiterated that the presence of excess inputs did not affect the reversibility of credit on shortages. The Tribunal also agreed that Rule 209A did not prima facie apply for imposing penalties on the second applicant.

In the final decision, the Tribunal ordered the waiver of the remaining duty and penalties upon the applicant depositing a specified amount within a given timeframe. The recovery of the waived amounts was stayed, and the Department was instructed not to dispose of the confiscated plant and machinery. The judgment balanced the challenges faced by the applicants in maintaining accurate records with the regulatory requirements for duty payment and penalty imposition, providing a nuanced resolution to the complex case.