2013 (6) TMI 650 - HC - Central Excise

Whether the Tribunal was justified in taking into consideration the Line Rejection Register when it was not a declared document under Rule 173 G (5) of the erstwhile Central Excise Rules, 1944? - manufacture of Colour Television Sets. - register of the rejected colour picture tubes - Held that - he department did not rely upon any order of the Commissioner, under sub Rules (4) and (5) of Rule 173 G prescribing the registers to be maintained by the manufacturers of rejected items in the process of manufacturing. It is also not stated that the Line Rejection Register was not a reliable document, or that rejection were to be maintained in any other form by the assessee. The Tribunal found that the number of rejections were insignificant as compared to total procurement of CPTs. The Appellate Tribunal allowed the appeal of the respondent on the ground that the appellant was maintaining the register of the rejected colour picture tubes. The revenue did not produce any evidence, to show that these rejected colour picture tubes were used in the manufacture of televisions, as a colour television set requires many other parts, such as cabinet, PCB etc. The assessee was maintaining separate records regarding rejection. - Order of tribunal confirmed.

Summary

Issues:
Central Excise Duty demand and penalty on the respondent for not declaring Line Rejection Register as per Central Excise Rules.

Analysis:
The judgment pertains to a Central Excise Appeal under Section 35-G of the Central Excise Act, 1944, challenging an order passed by the Customs, Excise and Service Tax Appellate Tribunal. The appeal questioned the validity of considering the Line Rejection Register, which was not declared under Rule 173 G (5) of the Central Excise Rules, 1944. The respondent, engaged in manufacturing Colour Television Sets, faced a demand of Central Excise Duty and penalty for allegedly not declaring the Line Rejection Register as required by the rules. The Commissioner confirmed the duty demand and imposed a penalty, citing that rejected Color Picture Tubes (CPTs) were not accounted for in the manufacturing process of CTVs. However, the Tribunal allowed the respondent's appeal, emphasizing that the rejected CPTs were separately recorded by the assessee, and there was no evidence of their use in the television manufacturing process.

The appellant-department contended that the respondent failed to produce the required register of rejections under Rule 173 G (5) before the Assessing Officer. The department argued that the Line Rejection Register submitted by the assessee could not be relied upon, as it was not produced as per the rules. Reference was made to Rule 173 G (4), which mandates the maintenance of accounts as specified by the Commissioner. However, the department did not present any order prescribing the specific registers for rejected items' maintenance during manufacturing. The Tribunal noted that the number of rejections was minimal compared to the total CPT procurement, indicating insignificance in the manufacturing process.

Ultimately, the Court found no error in the Tribunal's decision and concluded that no legal question warranted consideration. Consequently, the appeal was dismissed, upholding the Tribunal's ruling in favor of the respondent.