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TMI Blog2002 (5) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... f facts of the case are that M/s. ABL are manufacturers of Ball and Taper bearings. The officers on visit to the appellants Unit, verified the D-3 intimations filed by M/s. ABL and it was found that the factory had filed D-3 No. 42, dt. 28-8-91 but new bearings were despatched subsequently under the pretext of repaired bearings without payment of duty. The private records maintained by the M/s. ABL showed that the rejected bearings which were claimed to have been received for repair as per the above D-3 were in fact not received and were not handed over to the warehouse for reprocessing. Verification of RG 1 Register for the month of 9/91 showed that on 30-9-91 after completing the monthly closing entry, additional entry had been made as quantity sent for re-processing. The quantity stated to have been taken from the RG 1 stock for reprocessing is equal to the quantity said to have been received for reprocessing under D-3 No. 42, dated 28-3-91. It therefore appeared that there was no receipt of defective bearings for repair and in fact they had despatched new bearings subsequently, under the pretext of repaired bearings, without payment of duty to the tune of Rs. 2,86,652.00 under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y but filed D-3 No. 42/28-8-91 as if the goods were received in the factory and finally replacement only was done, the Depot has relied on two things primarily. (i) The letter dated 27-8-91 by Sri N. Sridhar of our Madras office. (ii) Relevant entries with regard to the receipt of rejected materials and issue for reprocessing were not found in the private record. Our reply that the letter of Sridhar was to be interpreted along with the other correspondences in the same matter and not to be read alone and further the entries not found in the private note book can not be relied on while it was very much available in the statutory records, was not accepted by the adjudicating authority. The goods concerned D-3 No. 42, dated 28-8-91 were booked from Delhi and the Delhi Regional office had informed the rejected goods despatched as early as 23-7-91. The chronological events detailed below will prove the appellants claim that the rejected goods were actually received into the factory and after re-processing it was despatched without payment of duty following procedure prescribed under Rule 173H of Central Excise Rules. 23-7-91 :- The message was received by the works f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for alleging certain irregulations. But here the charge of the department is that the entries of statutory record has not been properly reflected in the private register. The proper supervisory control can be exercised only over the entries of the statutory records and it is not possible to go through each and every private record maintained in various sections by various categories of employees. Hence relying on such private registers that too when it did not contain anything contrary to the statutory registers is not valid. As regards the RG1 entry on 30-9-91 the adjudicating authority has come to the conclusion that the bearings removed from the stores stock for reprocessing inside the factory have not been brought back to the stock for nearly 10 months to one year and hence the allegation in the Show cause notice that the fresh goods were replaced against the rejected goods has been confirmed. The appellants wish to state that the practice followed in their unit is, if any RG1 accounted bearings found contain any defects before despatch it will be sent from the store stock for reprocessing by making proper entries in the RG 1 register. The rejected duty paid goods have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng only rectifiable mistakes and hence they were rectified and redespatched. The letters referred in the order-in-original in support of department claim, did not contain anything about the non-rectifiable mistakes. Further the issuing of credit note is not directly concerned with the rectifiable or non-rectifiable nature of the rejected goods. In the statements of the senior managers of the factory, it was clearly brought-out that for maintaining cordial relation with the customers and for the financial adjustments the credit note to be issued in cases of not only rejected goods, but also for their time gap between the receipt and redespatch of the rejected and reprocessed goods. It should not be construed that the mere issue of credit note is confirming the scrapping nature of the rejected goods. Further while demanding Rs. 2,11,140.94 in the show cause notice only seventeen D-3s were quoted relevant to the above demand. But the alleged duty involvement in respect of the referred 17 D-3s was only Rs. 48,076.22 as detailed below as per the worksheet for show cause notice issued by the Asst. Commissioner, Division II, Hasur whereas the duty demanded was Rs. 2,11,140.94. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .95 RLS 6 11 5319/7-4-92 129.03 6304 Z 01 5316/7-4-92 11.50 6203 03 5644/26-8-92 21.94 6204 14 --/18-9-92 132.02 6307 01 5705/3-9-92 20.82 RLS 5 03 5318/7-4-92 35.19 RMS 10 01 6728/16-3-93 24.38 6303 08 6007/9-11-92 70.84 6208 02 5904/20-10-92 44.16 6304 Z 14 5912/22-1-92 161.00 163049.58 When this defect was pointed out, the Commissioner in his order-in-original stated that only the disputed D-3s were shown in the annexure to show cause notice. The appellants insist now that the annexure to the show cause notice contains a list of disputed D-3 for the duty invokment of Rs. 48,076.22 and only the worksheet given by the Asst. Commissioner without quoting any authority from the adjudicating authority contains the list of D-3 for Rs. 2,11,140.95 It is well a settled fact by various decisions of CEGAT and H.C. that what is not alleged in the sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded under this third heading but the Commissioner has given a finding that there is procedural violation by the appellant and hence is having the relevance from the angle of imposition of penalty. The ld. Commissioner imposed a penalty of Rs. 5 lakhs while confirming a total duty demand of Rs. 4,97,793/-. 3. The appellant submits that the adverse findings in respect of delayed receipt under Rule 173H has been made by the ld. Commissioner without any clear finding about the original dates of the Gate Passes. The Departmental Officers have visited the Unit, carried out inspection and audited repeatedly and no objection was raised at any time with regard to the compliance of the procedures under Rule 173H in respect of the three D-3s viz. D-3 No. 34, dt. 17-8-92, No. 43, dt. 31-10-92 and No. 54, dt. 8-1-93. In paragraph 27.1 of the impugned order, the Ld. Commissioner refers to D-3 No. 34, dt. 17-8-92 and makes the observation that the GP1 was issued some time between 21-8-91 and 20-12-91. It was pointed to the Commissioner that there was no mention of the date of the original supply of the material in respect of the D-3 No. 43, dt. 31-10-92, though the Commissioner categorically st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submissions made before us and have gone through the case records. We find that we have to give our decision on the following points : (a) Filing of D-3 intimation without the receipt of rejected goods and removal of fresh goods and the duty demanded in this regard is Rs. 2,86,652/-. (b) Removal of goods under the pretext of repaired goods when rejected goods could not be repaired, and the duty demanded on this account is Rs. 2,11,140/-. The total demand put together comes to the tune of Rs. 4,97,793/-. (c) Receipt of rejected goods beyond the stipulated period and declaring the said goods as if they have been received within the stipulated time. No duty is demanded on this. However, there is a finding given by the Commissioner that there is procedural violation by the appellants and hence the assessees are liable to penal action. 9. Coming to the first point, we observe that the appellants have taken the ground that the rejected goods were actually received into the factory and after reprocessing they were despatched without payment of duty. According to the appellants the rejected goods were despatched from Delhi under Lorry Receipt (LR) No. 159403 of Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oval of rejected goods under the pretext of repaired goods when rejected goods could not be repaired, we find that the appellants have vehemently argued that the rejected bearings is related to 17, (seventeen) D-3 numbers listed in the show cause notice and these were rectified and re-despatched. They have also taken the plea that issue of credit note is not directly connected with the rectifiable or non-rectifiable nature of the rejected goods and that credit notes can be issued not only in cases of rejected goods but also for their time-gap between the receipt and despatch of the rejected and reprocessed goods. But they have not let in any evidence to show that the credit notes have really represented the rejected and reprocessed goods. Therefore, this plea cannot be countenanced. According to the appellants, the amount of duty that would be payable according to the show cause notice relatable to 17 (seventeen) D-3 numbers is Rs. 48076.00 as worked out by them and brought out in the grounds of appeal, whereas the duty demanded is Rs. 2,11,140.94. We also find force in the contention of the appellants that duty has also been worked out and demanded in respect of the D-3s which wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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