VICTORIA MILLS LTD Vs. CCE

JUDGEMENT

(1.) THE appellants manufactured textiles. Annual stock taking was being conducted in their premises in terms of Rule 223A of the Central Excise Rules, 1944. Seven show cause notices were issued for recovery of duty and imposition of penalty on the shortage noticed in such stock takings conducted in 1977, 1978, 1981, 1983, 1984, 1985 and 1986. The Additional Collector held that six show cause notices for the period 1977 to 1985 are barred by limitation. In the seventh case the percentage of shortage was 0.76. He observed that loss of 1% was condonable and condoned the loss. However he imposed penalty of Rs. 30,000/ - in terms of the said rule. The assessees went in appeal before the Collector (Appeals). They submitted that the rule permits imposition of penalty of Rs. 2,000/ -. Therefore the maximum penalty leviable could be Rs. 2,000/ - in each case and sought remission in the penalty imposed of Rs. 30,000/ -. The Collector (Appeals) however found fault with the Additional Collector's findings that six show cause notices were barred by limitation. He therefore set aside the Additional Collector's order and remitted the proceedings back to him. Against this order the assessees are in appeal.

(2.) HEARD Shri M.H. Patil, advocate for the assessees and Shri A. Ashokan, JDR for the Revenue.

(3.) THE Additional Collector had given relief to the assessees in the case of six show cause notices which relief was taken away by the Collector. Proviso (2) to Section 35A(3) permits the Collector (Appeals) to do so but requires that a notice be given to the appellant within the time limit specified in Section 11A. There is no intimation in the impugned order of such step having been taken by the Collector. Shri Patil relies upon the Tribunal's judgment in the case of CCE, Bombay v. Vishal S. Chhabria in which it has been held that the appellate authority could not take away the partial benefit granted to the appellate by the original authority. The Tribunal in that case restored to the assessee the relief given by the original authority. In this situation I find that the Collector (Appeals) should have confined himself only to the case pertaining to the show cause notice dated 27.3.1986.