1998 (10) TMI 259 - AT - Central Excise

Summary

Issues:
1. Imposition of personal penalty under Rule 173Q for contravention of Rule 9(1) of the Central Excise Rules, 1944.
2. Alleged clerical errors leading to contravention of rules and imposition of penalties.
3. Arguments regarding mens rea as a prerequisite for penalty imposition.
4. Consideration of circumstances and explanations for penalty imposition.

Analysis:
1. The appeals before the Appellate Tribunal CEGAT, CALCUTTA arose from a common impugned order passed by the Commissioner (Appeals) against the appellants, who were engaged in manufacturing washing powder and availing Modvat credit. The Assistant Commissioner imposed a personal penalty under Rule 173Q for contravention of Rule 9(1) of the Central Excise Rules, 1944, due to alleged clerical errors in maintaining excise records.

2. The appellants' explanations revolved around unintentional clerical mistakes leading to contraventions. In one case, a wrong calculation of closing balance resulted in a debit balance clearance, while in another case, a debit entry was omitted in RG 23A Part II despite being reflected in the gate pass. The appellants argued that they rectified the errors promptly and had sufficient balance in their PLA to pay the duty, had they been aware of the discrepancies.

3. The appellant's consultant cited legal precedents to support their argument that penalties should not be imposed for bona fide mistakes rectified by the assessee without departmental intervention. On the other hand, the Respondent argued that contravention of Rule 9(1) and Rule 173Q did not require mens rea for penalty imposition, citing relevant case laws to support their stance.

4. The Tribunal considered the circumstances, including the appellants' prompt detection and rectification of mistakes, their newness in the excise field, and reliance on manual record-keeping due to being a small-scale unit. The Tribunal acknowledged the appellants' proactive approach in rectifying errors and set aside the impugned orders, emphasizing the human aspect of errors in maintaining excise records for small manufacturing units not computerized.

5. Ultimately, the Tribunal allowed the appeals and disposed of the stay petitions, highlighting the importance of considering the context and explanations provided by the appellants in cases involving technical and procedural errors in excise record-keeping.