MOHAN ALUMINIUM PVT LTD Vs. COLLECTOR OF C EX

JUDGEMENT

(1.) THIS appeal is directed against the order of Collector of Central Excise, Bangalore, dated 20-1-1988 imposing a penalty of Rs. 7,000 on the appellants under Section 173Q(1) of the Central Excise Rules, 1944, hereinafter referred to as the 'Rules'.

(2.) The appellants are manufacturers of aluminium cables and conductors at Bangalore. The Central Excise officers verified the accounts of the appellants on 8-3-1985 and found that the appellants had received a sum of Rs. 4,84,538.29 on 31-10-1983 from M/s. Kerala State Electricity Board on account of increase in the labour Index for the period August, 1980 to February, 1981 towards the supply of Aluminium Conductors. The appellants were also found to have received a sum of Rs. 2,26,100.66 in excess of the invoice value towards the supply of Aluminium Conductors from M/s. Maharashtra Electricity Board on account of price variation. The excess amount collected by the appellants on grounds of escalation charges from the said parties was not brought to the notice of the Central Excise authorities much less brought in any of the statutory register. The appellants also did not choose to amend the price list for inclusion of the escalation charges admittedly collected by them from the said parties and the appellants also had not paid the duty in regard to the same. It is only subsequent to the visit of the Central Excise officers on 8-3-1985 and scrutiny of the appellants' accounts, when the officers pointed out, the appellants paid the duty in regard to the said transactions on 9-3-1985 and 11-7-1985. In regard to this payment of duty the RT-12 returns under the Rules were submitted by the appellants for assessment by the proper officer in March, 1985 and July, 1985 and they were respectively assessed by the Superintendent of Central Excise in April and September, 1985. The Collector of Central Excise, Bangalore, by invoking the proviso to Section 11A of the Central Excises and Salt Act, 1944 issued a show cause notice to the appellants on 1-9-1987 calling upon them to show cause why a penalty should not be imposed on the appellants under Rule 173Q of the Rules inasmuch as the appellants had suppressed the receipt of the excess amount from the purview of the Department. The proceedings instituted pursuant to the show cause notice eventually culminated in the present impugned order now appealed against.

(3.) SHRI Vadivelu, the learned D.R., contended that intentional evasion of excise duty would certainly entail penal consequences under the Act and Rules and in the present case in respect of the escalation charges admittedly collected by the appellants in the years 1981 and 1983 from the said two parties no duty was paid and it is only after it was detected by the Central Excise officers on scrutiny of the appellants' account on 8-3-1985 the appellants came forward to discharge the duty liability. This conduct of the appellants is certainly culpable and would invite penal proceedings under the Rules. The learned D.R. further urged that the Superintendent of Central Excise has merely made assessment of RT-12 memoranda and has not issued a show cause notice for imposition of any penalty. In such a situation it is open to the Collector of Central Excise to institute proceedings under Section 11A and impose penalty. The learned D.R. further urged that though show cause notice was issued two years after the payment of the duty on the escalation charges collected and consequent to assessment of RT-12 memoranda, the same would be permissible inasmuch as the proviso to Section 11A empowers only the Collector to invoke the longer period of limitation and institute penal action and there is no legal bar for the same.