1. Collector of Central Excise, Calcutta has filed an appeal being aggrieved from order in appeal No. 973/Cal/83 dated 12-9-83 passed by the Collector (Appeals) Central Excise, Calcutta. The said appeal was presented in the Registry on the 20th day of January 1984. In the column No. 3 of the memorandum of appeal, the appellant has mentioned the date of communication of the order as the 17th day of October 1983.
Before the commencement of the proceedings, the appellant was called upon by this court to explain why the appeal should not be dismissed being hit by limitation. Shri A.K. Saha, S.D.R. submitted that by mistake the date of communication of the order has been mentioned in column No. 3 of the Memorandum of appeal as 17-10-83 against the correct data of communication of the order, the 20th day of October 1983. He has pleaded that the Asstt. Collector (T & A) Central Excise, Calcutta vide letter C. No. V(17)2/557/TBL/CE/83 dated the 16-2-84 had intimated the Registry that the correct date of communication of the order is the 20th October 1983. Shri Saha has also produced the original file of the Collector wherein the date of receipt of the order has been shown as the 20th October 1983. Shri A.K. Saha further pleaded that in computing the period of limitation, the date of service of order excluded. In support of this contention he referred to (page 762) of Central Excise Law Guide by R.K. Jain wherein it is stated that "the date of receipt should be excluded while calculating limitation" (source Markanda Sahu v. Lal Sadananda Singh-A.I.R. 1962 Orissa 279; A.I.R. 1929 Mad. 75 and A.I.R. 1910 Cal. 913). He submitted that thus if the date of receipt of the order is excluded, the appellant's appeal is within time. In the alternative, he has pleaded that in case this Court does not accept his argument as to the exclusion of the date of receipt of the order, the delay of one day in the filing of the appeal may be condoned as there was transport difficulty in reaching the office of the Tribunal on the 19th Jan. '84 and transport difficulty should be deemed to be a sufficient cause in the late submission of the appeal.
3. After hearing both the sides, I hold that the date of receipt of the order is to be excluded for the purpose of computation of limitation and hence the appeal is within time.
4. On merits, Shri A.K. Saha, [S.D.R. submitted that the respondent Company had manufactured some varieties of paper viz., (i) Blue wove, (ii) Cream wove and (iii) white Bank water market during the months July '77, March '78 and August '78 as revealed from the private record maintained by the said company but they did not maintain any statutory records for production and removal of the said goods without payment of C.E. Duty amounting to Rs. 3481.77 (3316.25 basic+165.52 spl). They were called upon to show cause why the said amount of duty should not be recovered under Section 11A of the Central Excises and Salt Act, 1944. In reply the respondent contended that the said goods being manufactured turned into bad quality which was not fit for marketing and got to be destroyed by repulping as brokes. The said contention of the respondent company was not found tenable by the Asstt. Collector of Central Excise who demanded the duty as above. A penalty of Rs. 1,050 was also imposed under Section 173Q of C.E. Rules, 1944. Against this order, the respondents filed an appeal before Collector (Appeals) C.E.who accepted their contention and allowed the appeal. Shri Saha pleaded that the order passed by Collector (Appeals) is not correct in law and the same should be quashed. He pleaded that the respondents had not approached the Excise Authorities for immunity from duty of excise leviable on the said goods. In respect of excisable goods not found fit for marketing requiring destruction, the respondents ought to have followed the procedure laid down in Collector's Trade Notice No.25/GL-10/1970 dated 24-2-70. As they have not followed the procedure they are not entitled to the benefit of the Notification No. 77/74, dated 27-4-74. The benefit of this notification is available to 'broke' which are paper waste obtaining during the course of manufacture and duty relief when these wastes are re-pulped is available only if they properly accounted for in RG-1 as 'broke' before disposal. In the instant case, no such accounting were observed by the Respondents nor have they adduced any evidence as to the manner of disposal of the said goods. He pleaded that for these reasons the order passed by the Collector (Appeals) is not correct in law.
5. Shri A.K. Saha, further referred to the entries at pages 101, 110 and 118 which contains the details of the paper and extract from the said register has also been filed along with the paper book. The same is re-produced as under;-----------------------------------------------------------------Page No. Lot No. Qualify GSM Machine Wt.-----------------------------------------------------------------101 2443 Blue Wove or 56 600 kg.
Reels 570mm110 2585 Cream wove or 55 500 kgs.
Reels 560118 2690 W/M white Bank 58 550 kgs.
(English Bank Dandy) 6. Shri Saha went on to submit that there is no reference or entries to suggest these are 'Brakes' and as such the Respondent is not entitled to the benefit of the Notification and duty rebate.
Shri A.K. Das Gupta who appeared on behalf of the Respondents pleaded that the respondent was under no legal obligation to follow the chapter 10 procedure and these papers had not reached the RG-1 point and there was no necessity for seeking permission from the C.E. Authorities. He has pleaded that the Trade Notice No. 25 does not relate to broke paper and in the instant case the paper had gone for re-pulping and as such the Collector (Appeals) had correctly accepted their claim and hence the appeal filed by the Revenue has no merits and should be dismissed.
7. In reply, Shri Saha pleaded that the goods are finished goods and as per the Tied Up book which is a private record of the Respondents, they ought to have accounted satisfactorily the mode of disposal of the goods.
8. After hearing both sides and going through the facts and circumstances of the case and the various submissions I find that the Collector (Appeals) has erred in law in holding that the Respondents are not liable for payment of duty. Under Rule 33 of the Central Excise Rules, 1944, the respondents who are following the self-removal procedure is expected to maintain daily stock account and necessary entries have to be made in the statutory RG-1 Register. The respondent has failed to maintain the same. As the Respondent has not made necessary entries in the RG-1 Register to account for the production as mentioned in their Tied Up Register, I hold that they have not discharged the burden cast on them to satisfactorily account for the production. The learned Collector (Appeals) has referred to the second proviso to Rule 49 of the C.E. Rules, 1944 which provides that no duty may be demanded on any goods claimed by the manufacturer as unfit for consumption or for marketing subject to the conditions imposed by the Collector by order in writing. In the instant case, the Respondent did not approach the authorities for waiver of duty. If the respondent had the intention of re-pulping the paper alleged to be defective paper, he should have kept proper records thereof. I, therefore, restore the order of the Asstt. Collector of Central Excise, to the extent of charging the duty of Rs. 3,481.77 (Rs. 3,316.25 basic f-165.52 spl).
However, keeping in view the facts and circumstances of the case, 1 feel that it is not a fit case where a penalty should be imposed on the respondents. I, therefore, uphold the order of the Collector (Appeals) quashing the imposition of penalty of Rs. 1,050. With the above modification, the appeal filed by the Revenue is accepted.