2003 (9) TMI 373 - AT - Central Excise

Appellant wins duty dispute; exemption limit upheld for undeclared items. Penalties waived for minor stock discrepancies.

HARISH CHEMICAL ENGG. INDS. Versus COMMISSIONER OF CENTRAL EXCISE, VADODARA

The Tribunal ruled in favor of the appellant on both issues. It held that duty was not payable on items not included in the initial declaration as long as ... Demand - Penalty Issues:1. Exemption from duty on items not included in the declaration.2. Penal action against a small-scale unit for minor discrepancies in maintaining stock registers.Analysis:Issue 1: Exemption from duty on items not included in the declarationThe appellant, a small-scale unit, had taken exemption from the operation of Rule 174 of the Central Excise Rules, 1944, by filing a declaration under notification No. 11/88-C.E. (N.T.). The impugned order demanded duty on items not included in the initial declaration. The appellant argued that as per the Board's Circular dated 24-12-1993 and a Tribunal decision, duty is not payable on items not included in the declaration if the unit remains within the overall exemption limit for the small-scale sector. The Tribunal found that the demand of duty and penal action was unjustified as the appellants did not exceed the exempted limit for all goods manufactured and cleared, including both declared and non-declared products. Therefore, the Tribunal ruled in favor of the appellant on this issue.Issue 2: Penal action against a small-scale unit for minor discrepancies in maintaining stock registersThe appellant faced penal action for discrepancies in maintaining stock registers, specifically for excess input material compared to the recorded stock. The appellant argued that no penal action should be taken against a small-scale unit exempted from excise control for minor discrepancies in maintaining their own stock registers, especially when working within the exemption limit. The Tribunal agreed with the appellant, stating that penal action cannot be justified against a small-scale unit for minor discrepancies in registers that are not required to be statutorily maintained, especially when the unit is operating comfortably within the exemption limit. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.In conclusion, the Tribunal ruled in favor of the appellant on both issues, holding that duty was not payable on items not included in the initial declaration as long as the overall exemption limit was not exceeded. Additionally, the Tribunal found that penal action for minor discrepancies in maintaining stock registers was unwarranted for a small-scale unit operating within the exemption limit.