Decided on November 14,1991



R. Jayaraman, Member (T) - (1.) THIS is an appeal directed against the order in original No. 05/MP/88 dt. 22 -8 -1988 passed by the Addl. Collector of Central Excise, Vadodara.
(2.) THE facts of the case are that the officers of Central Excise, Baroda visited by surprise the factory premises of the appellant on 25 -9 -1986 for checks. They noticed that the factory was engaged in the manufacture of 'Monoblock prestressed concrete sleepers'. They were availing the benefit of credit of duty on inputs used in the manufacture of the aforesaid product under Notification No. 201/79 dt. 4 -6 -1979. In the course of their checks, they carried out the physical check of the stock lying in the bonded storeroom and noticed 2268 pieces of concrete sleepers lying in fully manufactured condition in the bonded store room, but were found to be unaccounted for in the statutory registers maintained by the factory. The aforesaid quantity of concrete sleepers were seized, which were subsequently handed over to the appellants for safe custody under a supratnama.
(3.) THE officers, on scrutiny of RG 23 Part II, maintained by the Unit, noticed that there was a credit balance of Rs. 29,096.23 on 1 -3 -1986, which was also subsequently utilised. They also noticed that the appellants had continued to avail of the credit under Notification No. 201/79 to the extent of Rs. 1,81,398.21 in respect of the inputs, 'standard steel wires' classifiable under Tariff Item 68. The officers found that the aforesaid credit of duty to the extent of total Rs. 2,10,494.44 was utilised by the unit for clearance of the final product concrete sleepers. Since the Notification 201/79 stood rescinded with effect from 1 -3 -1986, it was alleged that the credit of duty so utilised was unauthorised and the appellants had not applied for permission for availing of the proforma credit of the duty paid on the aforesaid input. Hence on the basis of the aforesaid findings by the investigating officers, a show cause notice was issued proposing to demand duty to the extent of Rs. 2,10,494.44 in terms of Rule 9(2) read with Proviso to sub -section (1) of Section 11A. The show -cause notice proposed to confiscate the concrete sleepers seized, since they were not accounted for and also proposed to impose a penalty on the appellants. In the adjudication proceedings held by the Addl. Collector, the aforesaid demand was confirmed. The 2268 pieces of concrete sleepers were ordered confiscation but allowed redemption on payment of fine of Rs. 65,000/ -. A penalty of Rs. 50,000/ - was also imposed on the appellants. The present appeal is against the aforesaid order. Shri Willingdon Christian the Ld. Advocate on behalf of the appellants pleaded as below: (i) The show cause notice dt. 10 -6 -1988 covering the period 3 -3 -1986 to 25 -6 -1986 is fully time barred. The extended period cannot be in this case; because the inputs were received under D -3 declaration and they had also filed the extracts of relevant RG 23, indicating the availment of the credit under Notification 201/79, along with the relevant RT 12 returns. Hence the allegation of suppression as contained in the show cause notice is not sustainable. In this context, he made several citations. (ii) On the question of eligibility of credit under Notification 201/79 read in the context of sub -rule (8) of Rule 56 -A, he cited the decision of the South Regional Bench reported in 1989 (20) ECC T 97 in the case of Kottukulam Engg. (P) Ltd. v. The Collector of Central Excise, Coimbatore. He pointed out that even the final product as well as the input are the same in the aforesaid decision as in the present appeal. The issue is also the same namely that the appellants therein were availing of benefit of 201/79 notification, which stood rescinded on 1 -3 -1986, but they continued to avail of the credit under aforesaid notification. The South Regional Bench held that by virtue of sub -rule (8) of Rule 56A, which was inserted by Notification 91/86 dt. 10 -2 -1986 and 176/86 dt. 1 -3 -1986, they can continue to avail of the benefit of proforma credit. In view of this decision directly on the issue, he pleaded that their case, even on merits, is to be allowed. (iii) As regards the confiscation of concrete sleepers and imposition of penalty, he pleaded that though the concrete sleepers were fully manufactured, they were rejected by the Railways. This is evident from the panchnama, to which he referred, for showing that these are shown as rejected sleepers in the panchnama. Since these sleepers are rejected, they have not taken into account in the RG1 register. In this context, he also referred to the letter dated 9 -4 -1983 addressed to the Range Supdt., wherein they have indicated that their product is purchased by Railway Deptt. only after rigorous testing. Hence products which are not tested, cannot be shown as excisable goods in the RG -1. In view of this letter, which was not objected to by the department, they had not entered the rejected sleepers in the RG -1 Register. He therefore pleaded that no mala fides can be attributed warranting confiscation of the sleepers and also imposition of penalty.;

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