1993 (4) TMI 153 - AT - Central Excise

Tribunal Decision: Duty Upheld on Paper Shortage, Directors' Penalties Set Aside

The Tribunal upheld the duty on the shortage of carbonless paper and the confiscation of self-copying paper but set aside the duty on printing charges and ... Demand - Limitation Issues Involved:1. Shortage of 7 reams and 265 sheets of carbonless paper.2. Non-accountal of 1236 rolls of self-copying paper in RG-1 register.3. Recovery of duty on printing charges incurred on duty-paid self-copying paper sent for printing.4. Imposition of penalties on the Directors and Administrative Officer.Detailed Analysis:1. Shortage of 7 Reams and 265 Sheets of Carbonless Paper:The appellants contended that the alleged shortage was based on the statements of the Administrative Officer during the officers' visit and that the goods were later found in the Bonded Store Room. They claimed to have paid the duty amounting to Rs. 1,432.11 for the alleged shortage. However, the Tribunal found no documentary evidence to support the claim that the goods were later traced and cleared on 24-11-1988. Therefore, the Tribunal upheld the Collector's decision that the appellants failed to satisfactorily account for the goods and were liable to pay the duty.2. Non-Accountal of 1236 Rolls of Self-Copying Paper in RG-1 Register:The appellants argued that the rolls were not fully manufactured and hence not entered in the RG-1 register. They claimed the goods were only covered with kraft paper to avoid deterioration and were not in a deliverable state. The Tribunal, however, noted that the goods were found in packed condition with the company's monogram and other details. The Administrative Officer admitted that similar rolls were cleared and sold from the factory on payment of duty. The Tribunal agreed with the adjudicating authority that the goods were fully manufactured and fit for being marketed, thus requiring entry in the RG-1 register. The Tribunal found no infirmity in the Collector's order holding the goods liable to confiscation and imposing penalties but reduced the redemption fine from Rs. 6,47,473.50 to Rs. 1,00,000.00 and the penalty from Rs. 2,00,000.00 to Rs. 50,000.00.3. Recovery of Duty on Printing Charges Incurred on Duty-Paid Self-Copying Paper Sent for Printing:The appellants contended that no duty was recoverable on printing charges when self-copying paper was cleared on payment of duty and sent for printing to independent job workers. They argued that printing does not amount to manufacture and even if it did, the duty liability should fall on the job worker. The Tribunal found that plain unprinted self-copying paper and printed self-copying paper received back under Rule 57F(2) were different categories and should be assessed based on their condition at the time of removal. The Tribunal held that the Collector's finding that duty was recoverable on the printing charges was not sustainable and set aside the demand of Rs. 1,99,151.61. They also agreed that the demand was time-barred as the relevant RT-12 returns were finalized by the Department.4. Imposition of Penalties on the Directors and Administrative Officer:The appellants contested the penalties on the grounds that there was no evidence of their involvement in any clandestine removal of goods. The Tribunal referred to the Delhi High Court's decision in Santanu Ray v. Union of India, which held that individual liability of a Director to the payment of excise duty and penalty requires specific evidence of their involvement. The Tribunal found no such evidence in the impugned order and set aside the penalties of Rs. 1 lakh each on three Directors and Rs. 25,000 on the Administrative Officer.Conclusion:The Tribunal upheld the Collector's order confirming the duty on the shortage of 7 reams and 265 sheets of carbonless paper and the confiscation of 1236 rolls of self-copying paper. However, it set aside the demand for duty on printing charges and the penalties on the Directors and Administrative Officer. The redemption fine was reduced to Rs. 1,00,000.00 and the penalty to Rs. 50,000.00. The appeal was disposed of in these terms.