RG-1 entry requirement for processed fabrics under Notification No. 79/82 defeated Rule 209A penalty

Rule 209A penalty was found unsustainable where processed fabrics were covered by Notification No. 79/82 and RG-1 entry became relevant only after folding and measurement. The authorities had not properly considered that requirement, and the alleged failure to maintain records under Rules 53 and 226 was not attracted on the facts. As the basis for penal action failed, the penalty was set aside.

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Issues: Whether penalty under Rule 209A of the Central Excise Rules, 1944 was sustainable when the assessee relied on Notification No. 79/82 for the stage of RG-1 entry in the case of processed fabrics.

Analysis: The requirement for making RG-1 entries in respect of processed fabrics arose only after folding and measurement under Notification No. 79/82 dated 28-3-1982. The authorities below did not properly consider this position. On the facts, the alleged omission to maintain records in terms of Rules 53 and 226 of the Central Excise Rules, 1944 was not attracted, and the basis for penal action failed.

Conclusion: The penalty on the appellant was not sustainable and was set aside.

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