Customs, Excise and Gold Tribunal Delhi Hindustan General Inds. Ltd. vs Collector Of C. Ex. on 22 July, 1997 Equivalent citations: 1997(96)ELT382(TRIDEL) ORDER A.C.C. Unni, Member (J) 1. In this appeal M/s. Hindustan General Industries Limited, Delhi have sought the setting aside of the order of the Collector (Appeals), Central Excise, Delhi dated 3091993 to the extent the said order directed remand of their case to the Deputy Collector and also setting aside of the penalty imposed by the Deputy Collector on steel ingots on the ground of non accountal by them of the same in their RG 1 Register. 2. Appellants are suppliers of LPG gas cylinders manufactured by them to the big oil companies after getting specific orders from them. They have stated that LPG cylinders being highly delicate and sensitive items, even the requisite valves needed to be fitted in the cylinders were supplied by the oil companies themselves. Besides, the procedure for manufacture is also subject to rigorous conditions. First of all, the requisite raw material of specific type of steel sheets is obtained from steel manufacturing companies in accordance with specifications given by the oil companies. The material released to the appellants is verified by officers of the Bureau of Indian Standards and test certificates are issued by BIS. These raw materials are not available in the market and the appellants are not in a position to buy the same from any source outside. Even the cutting, welding, etc. to give the sheets requisite shapes is in accordance with the standards laid down by BIS and LPG cylinders are numbered in accordance with the instructions given by the BIS. After fabrication of the cylinders, valves (which are supplied by the oil companies) are fitted by appellants to the cylinders and returned to the oil companies. Appellants' submission is that further tests are required even after fitting of valves in the cylinders before they are sent to oil companies to ensure that there was no leakage. 3. On a visit to the appellants' factory by the Assistant Collector on 611992 and after physical stock verification of finished goods, it was found that 711 LPG cylinders were lying in the factory as against 'nil' balance recorded in RG 1 Register. The stock taking of MS ingots showed an excess of 28.685 MT of ingots than the balance recorded in the RG 1 Register. In a statement recorded from the General Manager of the appellant company under Section 14 of the Central Excises and Salt Act, 1944, the General Manager stated that LPG cylinders found unaccounted in the RG 1 Register were yet to be tested by them internally and finally by BIS. Till these two tests were carried out, the cylinders could not be considered as completely manufactured and hence they could not be accounted for the RG 1 Register. Regarding excess of 28.685 MT of MS ingots, the General Manager stated that production from 111992 to 1411992 could not be accounted for in RG 1 Register since the dealing assistant maintaining the records was not well and could not attend the office regularly. The explanation given by the General Manager was not accepted and 806 LPG cylinders and 28.685 MT of MS ingots were seized under Section 110 of the Customs Act as made applicable to like matters under the Central Excise Act on the reasonable belief that the same were not recorded in RG 1 Register with intent to evade duty and thus liable to confiscation. In the OrderinOriginal dated 5101992 passed by the Deputy Collector, Deputy Collector confiscated the LPG cylinders but allowed them to be redeemed on payment of Rs. One lakh. A penalty of Rs. 50,000 was also imposed apart from confiscating the steel ingots. In the impugned order the Collector (Appeals) upheld the liability of the appellants as nonaccountal of steel ingots. However, on the question of LPG cylinders, Collector (Appeals) had directed de novo decision by the Deputy Collector after necessary enquiries are made with the BIS authorities. The present appeal before me is against the said order of the Collector (Appeals). 4. For the appellants Ms. Pillai, ld. Counsel appeared. Shri Y.R. Kilania, JDR appeared for the respondent. 5. Ld. Counsel for the appellants contended that the lower authorities have failed to appreciate the fact that the appellants could not have removed or sold the MS ingots in the open market as the said MS sheets were specifically procured for the purpose of fabricating LPG cylinders for supply to the PSU oil companies and the MS sheets were themselves subject to specifications laid down by the BIS for the purposes of fabrication into LPG cylinders. Further, the production thereof was fully accounted for delivery to the PSU oil companies who had placed orders on the appellants. However, the lower authorities had not appreciated the fact that the valves fitted in the cylinders were themselves subject to specifications and were supplied by the oil companie