Customs, Excise and Gold Tribunal - Hyderabad
Jay Engg. Works Ltd. vs Cce on 22 September, 2000
Equivalent citations: 2000(93)ECR440(TRI.-HYDERABAD)
ORDER S.S. Sekhon, Member (T)
1. This appeal has been filed by the manufacturer of valves, nozzles and other I.C. Engine parts. They were served a show cause notice on 13.5.1992 asking for duty on scrap and proposing imposition of penalty. During the manufacture of their products, scrap was generated and removed from the factory premises, during the period 1.4.1990 to 31.3.1991 without payment of duty they had not declared the same in the classification list filed for the relevant period. The lower authority has confirmed a duty demand of Rs. 75,018/- towards BED and Rs. 3,751/- to SED on a quantity of 125.030 MTs of scrap cleared after considering the other items in the show cause notice could be cleared on duty as per relevant notification. Penalty of Rs. 25,000/- under Rule 173Q of Central Excise Rules, 1944 was imposed on the manufacturer for contravention of Rules 173B and 9(1) ibid.
2. The appeal is made on the ground that the manufacturer has properly accounted their production of I.C. engine parts and the scrap and there was no intention to evade payment of duty and the officers were visiting the premises and therefore demands in this case were barred by limitation under Section 11A. Rule 173B only provides that goods intended to be produced by manufacturer are to be declared and classified and failure to declare emergence of scrap on Rule 173B documents cannot be deemed to be suppression with an intent to evade payment of duty in the facts and circumstances of this case.
3. We have heard Shri V.J. Shankaram, Ld. Advocate for appellants who fairly conceded that the present appeal is for waiver of penalty as the entire episode of non-mention of the scrap in the relevant documents for clearance under Rule 173B was due to clerical error on the part of the excise clerk dealing with the subject and keeping in mind the fact that the company was not having any intention to evade or avoid and the entire duty amount has been paid, the imposition of penalty is not called for and requested for setting aside the entire amount of penalty imposed.
4. Ld. DR Shri S. Kannan for Revenue submits that Commissioner has given the benefit which was due on the products eligible for exemption and has correctly determined the duty and the penalty consequently under Rule 173Q and reiterated the grounds as arrived at in the order of the Commissioner.
5. We have considered the submissions and find that
(a) duty amounting to Rs. 1,79,178/- towards BED and Rs. 8,959/- towards SED as proposed in the SCN is reduced to slightly less than half of the amounts. The entire demand made was on scrap cleared and when we find that total demand made on scrap cleared is not found to be justified by the Commissioner himself in as much he has held that total duty liability to be reduced from Rs. 1,88,137/- to Rs. 78,769/- by considering major part of the removals to be permissible under law, the intention to evade duty cannot be established. The duty liability of Rs. 78,769/- which has been confirmed and discharged without demur by appellants and this conduct has convinced us that there was no intention to suppress or evade payment of duty, when they have accounted for excisable and other goods which was considered by them to be non-excisable very correctly and major part of the non-excisable goods as considered by them, were also found (to) be not chargeable to duty. Penalty therefore is required to be reduced.
(b) We have considered the fact that the Commissioner has imposed penalty under Rule 173Q for contravention of Rule 173B and Rule 9(1). We find that for contravention of Rule 9(1), penalty can be imposed itself under Rule 9(2) thereof subject to a maximum of Rs. 2000/-. The order of the Commissioner does not differentiate as to what amount he has determined for contravention of Rule 173B and what amount he has imposed under Rule 9(2). Therefore the order imposing a penalty of Rs. 25,000/- which is much in excess of the penalty provided for contravention of Rule 9(1) under Rule 9(2) of Rs. 2000/- is required to be set aside.
(c) When we find that serious allegations of removal without duty or production of any excise paying documents has been arrived at and contravention of Rule 9(1) has been arrived at by the Commissioner, penalty of not more than Rs. 2000/- was required to be imposed in this case under Rule 9(2) thereof. Accordingly, we reduce the penalty from Rs. 25,000/- to Rs. 2000/- (Rupees Two Thousand only).
(d) As regards penalty for contravention of Rule 173B, we find that it is an admitted fact that a classification list was filed, since from the show cause notice itself, it is observed that the classification list filed during that period is a relevant document; that classification list filed did not disclose about removing of scrap as excisable goods has been explained to our satisfaction to be due to a clerical error. Even if it is not so, a classification list has been filed and has been duly approved after making necessary enquiries. The Officer was bound to make enquiries and determine what the other product appellant was removing and since appellants had the records maintained in a proper fashion of the scrap so removed, which has been relied upon in the show cause notice, we do not consider, in the facts of this case, that there was any contravention of Rule 173B. An incomplete classification list filed ipso facto would not result in contravention of Rule 173B, especially when the alleged incomplete classification list has been ^ duly approved by the Proper Officer after making such enquiries as he deemed fit in the matter. We rely on the decision of CCE v. Muzzaffar Na-gar Mills reported at Para-13 thereof also.
6. In view of our findings herein above, we reduce the penalty to Rs. 2000/-(Two thousand only) and modify the order impugned accordingly to the extent indicated above.
(Pronounced & Dictated in open court).