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TMI Blog1997 (9) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... zed. Scrutiny of the records showed various irregularities. We are concerned in this appeal with the manufacture and clandestine clearance of cops out of unaccounted aluminium rods and clandestine clearance without payment of duty, excess stock of scrap over and above that accounted for, undervaluation of scrap and manufacture of certain quantity of steel cops out of unaccounted steel. Accordingly show cause notice dated 16-3-1988 was issued with detailed allegations in regard to various irregularities, alleging suppression of material facts with intent to evade duty and invoking proviso to Section 11A(1) of the Central Excise Act, 1944. Appellant resisted the notice. Collector passed the impugned order dropping certain charges and demand based thereon but confirmed allegations regarding the four irregularities referred to above and confirming the demand of Rs. 15,10,792.60, confiscating certain aluminium and steel cops seized by allowing redemption on payment of Rs. 3,00,000/- and imposing penalty of Rs. 5,00,000/-. This order is now challenged. 4. The first irregularity referred to is the manufacture of aluminium cops out of certain unaccounted quantity of aluminium rods and cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s receipt in June, 1986 and thus there was a double entry. It is contended that 42.201 MT was wrongly shown in May, 1986 and wrongly included in 62.224 MT and therefore actual receipt included 51.724 for June, 1986. 7. In this connection reference is made to pages 40 to 42 of the paper book containing reply to the show cause notice. These pages are copies of documents seized from the appellant and copies of which were furnished to the appellant along with the show cause notice. At page 40 are the details of raw materials received as on 15-5-1986. Raw materials are Aluminium Rod, Aluminium Tube, Powder of various kinds and Steel Tubes. Opening balance, Receipt, Consumption and Closing balance are referred to. Details at page 40 are seen typed at page 41 purporting to be details of raw materials as on 1-6-1986. In other words, so far as typed portion is concerned, pages 40 and 41 are identical except that dates are different - 15-5-1986 and 1-6-1986. Additionally page 41 contains various figures in ink. The quantity of aluminium rods shown as receipt at page 40 is 20,023 kgs. i.e. 20.023 MTs. Amount shown as 6.21. Other figures are also identical. Though same typed figures are seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t examine the reason for the entries in ink in the statement as on 1-6-1986 and the identity of the figures shown at pages 40 and 41. Reconciliation statement referred to is at page 33 of the paper book containing reply to the show cause notice. This page contains reference to 42.201 MTs being a double entry. Nothing turns on the reconciliation statement except that it indicates the case of appellant. The explanation appears to be reasonable and probable and was wrongly rejected by the Collector. We are therefore of the opinion that the difference in quantity of aluminium rods acted upon by the Collector should have been reduced by 42.201 MTs. 9. Reconciliation statement also refers to 11.622 MTs of rods received and on which proforma credit had not been availed. This figure was not seen in Form IV Register seized by the excise officers. Proforma credit was not available in respect of the inputs used in the manufacture and therefore two separate Form IV Registers were being maintained; one in respect of inputs for which proforma credit was available and the other in respect of inputs on which proforma credit was not available and the Collector looked into the former and not the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken reference in the statement to Head Office was not established. The Collector also referred to the correct value of scrap being Rs. 20/- per kg. as disclosed in internal documents seen at page 129 of the paper book containing show cause notice. There is no independent evidence before us in support of receipt of duty paid aluminium scrap from Kota factory nor does it stand to reason that the Kota factory should send scrap to the company under assessment for trading purpose. It is also to be noticed that the appellant did not conform to the requirement of Rule 173H of the Central Excise Rules, 1944 while purporting to receive duty paid scrap from Kota factory. The allegation that there was a mis-description in the statement to Head Office cannot be accepted since going by the figures shown in the internal document, the figures in the statement will alter only if the entire scrap referred to is taken to be aluminium scrap. That was what the statement to the Head Office indicated. In these circumstances, we agree with the Collector that the explanation about the discrepancy between the quantity of aluminium scrap disclosed in the statement to Head Office and aluminium scrap disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lector, on the basis of Item 8 in the Table, held that 17,167 steel cops had not been accounted and had been clandestinely cleared without payment of duty. 14. According to appellant, Serial Numbers 7 and 8 in the chart must be taken together; that both relate to old cops that had been received by the appellant from J.C.T. Ltd. for purpose of repair and if both the items are taken together, deficit of 17,100 against Item Number 7 is neutralised by surplus of 17,167 against Item Number 8. It was stated at pages 16 and 17 of the reply to the show cause notice that though J.C.T. Ltd. were sending aluminium cops for repair, subsequently they wrote saying that the consignment consisted partly of steel cops and partly of aluminium cops. The reply further stated that when the consignment was received along with GR, there was wrong recital that the entire consignment consisted of old aluminium cops and this wrong recital was incorporated in the appellants excise records; that appellant had given Form D-3 declaration in respect of this consignment; that appellant received a letter dated 24/25-6-1987 from J.C.T. Ltd. pointing out that out of 20,300 old cops under GR No. 3785, dated 23-6-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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