9911796707
TMI Blog2002 (11) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... exported by the appellants. The appellants are also permitted to sell 5% of their production as rejects in the D.T.A. on payment of appropriate duty. (b) The officers of the Central Excise Department visited the premises of the appellants on 7-11-1992 and undertook a verification of the stock position of the finished goods and also the goods lying as rejects. After undertaking the verification, they alleged that there was an excess of stock in certain varieties and shortage in respect of certain other varieties. They also recorded statements from the officials of the company. In pursuance to the above enquiries, a show cause notice dated 4-5-1993 was issued proposing to demand duty and imposing penalties. After the appellants submitted their replies to the show cause notice, the impugned order has been passed by the Commissioner confirming the demand of duty and imposing penalty. 3. After hearing both sides and considering the matter it is found : (a) Demand of duty has been made by invoking Proviso to Section 3 (1) of the Central Excise Act, 1944. The demand has been worked out by applying a rate of Rs. 50/- on the differential quantity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s areas are being considered for purposes of internal control documents to reduce the unrecoverable waste areas. This position has been confirmed by the statements of the Managing Director of the Company. The appellants contest that it is the trade practice in Trade, even today, known to the department, as is confirmed by a report dated 21-5-2002 of the Jurisdictional Superintendent of Central Excise to the Deputy Commissioner in the case of M/s. Divyashakthi Granites, made available in page 88 of the paper book, that when sale of defective granite polish slabs is effected the 'salvageable area' is only reckoned and charged. Only such 'net area' is considered for accounting purposes. We find that the internal documents showing the gross area, will not necessarily indicate or confirm that excess goods have been cleared without payment of duty. That differential quantity has also been sold to the same customer, cannot be concluded in absence of any evidence brought on record, by department regarding payment of or excess receipts, of such additional amounts. We find there is force in the assertion of the appellants, that the total monetary realisation made by them from the customer fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e customer to have paid any amount, in excess of the sale invoice raised amounts to the appellants or anybody else, the actual realisation made from the customer has to be construed as realisation made for the total quantity delivered. Therefore there would be no further demand of duty as found at (c) above. (e) As regards the demand of duty of Rs. 8,62,617/-, the basis of this demand is set out in Annexure-VII to the show cause notice. This annexure is based on a document available at Annexure-IV to the show cause notice. According to the Department, the figures indicated in the sheet of paper represents the quantity despatched during the period April, 1991 to June, 1991. The appellants submit that a conclusion of clandestine removal cannot be based on a single document. The mere fact that the title of the document indicates 'local despatch' and that cannot be the sole ground to conclude that the quantity indicated therein has been removed without payment of duty, especially when the writer of the document has not been examined. The identity of the writer had been informed to the officers by Shri Arjun Rao in his statement dated 16-4-1993 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; M.M. Dyeing & Finishing v. CCE, Chandigarh - 2002 (139) E.L.T. 143 relied upon by the learned Advocate to induce us to conclude that duty on this account based on this single unexamined document can- not be determined and demanded. (f) As regards the demand of duty of Rs. 12,12,211/- found short, the basis of this demand is made on comparison to the RG 1 register maintained by the appellants and on annual verification of the quantities physically available which shows a shortage of 36,386.42 sq. ft. and this has been alleged to have been cleared in contravention of provisions of Rules 9(1), 53, 100D, 100E and 226. A reading of Rule 100A of the Central Excise Rules, 1944 indicate that an EOU is not required to maintain a RG 1 register. Therefore, the RG 1 being maintained in this case cannot be a document prescribed by law to indicate any shortage whatsoever. It cannot be used for purposes of any comparisons. No penalty can be imposed under Rule 226. Since provisions of Chapter VIIA under which Rule 173Q falls are not applicable to EOUs covered under Chapter VA of the Central Excise Rules, 1944. When excess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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