2002 (9) TMI 210 - AT - Central Excise

Summary

Issues: Duty demand on unaccounted manufactured fabrics, penalty imposition, confiscation of alleged unaccounted fabrics.

The Appellate Tribunal CEGAT, Bangalore, in the case involving duty demand on unaccounted manufactured fabrics, penalty imposition, and confiscation of alleged unaccounted fabrics, found that the appellants, manufacturers of man-made fabrics (MMF), were issued a notice for a shortage of gray fabric and unaccounted sarees. The Assistant Commissioner demanded duty amounting to Rs. 6,658 under Rule 9(2) of Central Excise Rules, 1944, read with Section 11A of the Central Excise Act, 1944. The Commissioner (Appeals) upheld the duty demand and penalty imposition, stating that the appellants failed to satisfactorily explain the shortage of gray fabric and unaccounted sarees. The Tribunal, upon review, found no evidence to support the conclusion that the appellants had manufactured sarees from the short quantity of gray fabric and cleared them without payment of duty. Therefore, the duty demand and penalty under Section 11AC were not confirmed.

Regarding the unaccounted 1980 meters of MMF sarees found within the factory premises, the Tribunal noted that the seizure was in running length and considered the possibility that it could be the production of that day. The Tribunal emphasized that mere non-accountal of goods in the RG 1 would not warrant confiscation and penalty under Rule 173Q. As the plea regarding the entry of sarees in RG 1 only after cutting to size was not considered by the lower authorities, the confiscation and penalty imposed were not upheld. Consequently, the appeal was allowed based on these findings.