COMMISSIONER OF C. EX. Vs. KUCHHAL UDYOG

JUDGEMENT

(1.) THIS appeal has been filed by the Revenue against the order dated 21 -10 -1998 of the Commissioner (Appeals) who modified the order -in -original of the Additional Commissioner of Central Excise, Ghaziabad by reducing the penalty amount of Rs. 1,09,666.89 to Rs. 50,000/ - on an appeal filed before him by the respondents.

(2.) FACTS giving rise to this appeal, may briefly be stated as under :

(3.) THE respondents are registered with the Central Excise department for manufacture of PVC pipes. They had been availing credit facilities of Central Excise duty paid on the inputs used in the manufacture of those pipes. However, on 6 -8 -1997 when surprise check was made by the Preventive Officers of the Central Excise, shortage in the stock of certain varieties of PVC pipes involving Central Excise duty of Rs. 7015.57 and in the stock of PVC Resin involving Modvat credit of Rs. 1,02,651.32 was detected. The respondents could not offer any plausible explanation of this shortage and they were served with a show cause notice dated 29 -9 -1997 wherein all these facts were brought to their notice and their reply was sought. That notice was contested by the respondents by alleging that PVC pipes were damaged/broken while handling and on that account shortage took place. Regarding shortage of PVC resin, they alleged that more raw material might have been consumed in the manufacturing process as their workers are not well educated in accounts matters and that has resulted in shortage of raw material. The Additional Commissioner, however, did not feel satisfied with the reply of the respondents and vide order -in -original dated 19 -11 -1997 demanded Rs. 7015.67 as duty payable on the finished goods found short and disallowed credit of Rs. 1,02,651.32 in respect of PVC resin and imposed a penalty of Rs. 1,09,666.89 under Rule 173Q of the Central Excise Rules read with Section 11AC. The demand of Excise duty was met by the respondents by making debit entry in the RG. 23A/Pt. II Register and the same was treated as adjusted. Similarly, the amount of disallowed Modvat credit was debited in the very register by the respondents and the demand stood adjusted.