K.Sankararaman, - (1.) THIS appeal by M/s. Bengal Chemicals & Pharmaceuticals Limited is directed against the Order-in-Original dated 30-12-86 passed by the Collector of Central Excise, Calcutta-I Collectorate, imposing on them a penalty of Rs. 2,000/- under Rule 173-Q of the Central Excise Rules, for failure to observe the formalities of Central Excise Rules.
(2.) In the appeal it has been represented that the products in question in respect of which they have been penalised were Oral Rehydration Salts which were exempted from duty by Notification No. 130/81 dated 27-6-81 under certain conditions. They had supplied the said goods to the Government of West Bengal for Community Health Volunteers under Rural Health Scheme free of cost. The relevant documents could not be submitted in time as they had been misplaced. These were, however, submitted after tracing them. The Collector had dropped the demand being satisfied that they were eligible for the benefit of exemption but imposed penalty for non-maintenance of statutory records. It has been contended in the appeal that when the Collector found that they were not liable to pay any duty, he should not have imposed any penalty. Rule -173-Q applied by the Collector for imposing penalty is not applicable. Only Rule 226 is involved. When the appeal was posted for hearing, Shri K.K. Banerjee, learned Counsel appeared on behalf of the appellants. He reiterated the points raised in the appeal petition and emphasised the fact that as the goods in question were eligible for exemption claimed by them and as such a claim had also been upheld by the Collector of Central Excise, Calcutta-I, the imposition of penalty was not called for. The case does not attract the penal provisions of Rule 173-Q relied upon and applied by the Collector. He, therefore, pleaded that their appeal may be allowed and consequential benefits ordered to be extended to them.
(3.) THE arguments raised by Shri Banerjee were opposed by the learned S.D.R. Shri M.N. Biswas, appearing for the respondent Collector. He submitted that though the goods in question had been held to be eligible for the benefit of exemption, the appellants had failed to maintain statutory records, as pointed out by the Collector in his adjudication order. He had imposed a token penalty of Rs. 2,0001- only. He, therefore, pleaded that the Collector's order may be upheld and the appeal rejected.;