1. Appeal under Section 35-E of the Central Excises and Salt Act, 1944 praying that in the circumstances stated therein the Tribunal will be pleased to restore the Order Original C. No. V/34/3/186/79-MP III dated 22-2-82 of the Assistant Collector of Central Excise, Mysore Division.

2. This appeal coming up for orders upon perusing the records and upon hearing the arguments of Shri S.K. Choudhury, Senior Departmental Representative for the appellant and upon hearing the arguments of Shri A.K. Raghavendra Rao, Advocate for the respondent, the Tribunal makes the following.

3. This is an appeal by the Collector of Central Excise, Bangalore against the Order-in-Appeal No. V/34/1/82 dated 9-6-82 against the Order No. V/34/3/186/79-MP III dated 22-2-82 passed by the Assistant Collector of Central Excise, Mysore Division. In his original order the Assistant Collector required M/s. Karnataka Scooters Ltd., Somanahally to pay a sum of Rs. 1,36,906.18 being the Central Excise duty short-paid by them during the period August, 1977 to April, 1978, February, 1979 and March 1979 as mentioned in the R.T. 12 returns for. the respective months under Rule 10 of the Central Excise Rules, 1944, read with Section 11A of the Central Excises and Salt Act, 1944. The events relating to this order may be summarised as follows:

4. The respondent had been obtaining Internal Combustion Engines, on which duty had been paid, for the manufacture of scooters and deducting the amount of duty paid on such Internal Combustion Engines, while arriving at the amount of duty payable on the scooters manufactured and cleared by them. They were also availing of the exemption contained in Notification No. 198/76-C.Ex. dated 16-6-76 according to which certain class of scooters had been exempt from payment of duty leviable on them, as is in excess of 75% of the duty, subject to certain conditions. While clearing the scooters the respondent had not taken into account the net duty leviable on the scooters i.e. the duty normally leviable under the Central Excise Tariff; subtract the amount of duty paid on the Internal Combustion Engines and then reduce the figure by 2596. This had resulted, according to the appellant, in the short-payment of the duty to the extent of Rs. 1,36,906.18. When the monthly R.T. 12 returns were seen by the concerned Superintendent of Central Excise, he noticed, the short-payment and made a suitable endorsement to that effect on the relevant R.T. 12 returns in terms of Rule 173(I) of the Central Excise Rules, 1944. The amount indicated as short-paid was not debited by the respondent in the Personal Ledger Account. Thereupon the Superintendent of Central Excise, I.D.O. Mysore issued a show cause notice under C, No. V/34/3/139/79-M.P.II dated 24-5-79 to the respondent referring to demands raised in terms of Rule 173(0(2) in the respective monthly R.T. 12 returns submitted by the assessee (respondent) in terms of Rule 173G(3) of the Central Excise Rules, 1944 and calling upon the respondent to show cause to the Assistant Collector of Central Excise as to why the demand raised by the Superintendent of Central Excise, M.O.R. Mandya and R.B.C. Units, Mysore should not be confirmed, as the correct procedure in availing of the concession in Notification No. 198/76 had not been followed. After hearing the party, the Assistant Collector passed the order referred to earlier which reads as follows:

"I hereby require M/s. Karnataka Scooters Limited, L.4 No. 1/76, Somanahally, Maddur Taluk, Mandya District, to pay a sum of Rs. 1,36,906.18 (Rupees one lakh thirty six thousand nine hundred six and paise eighteen only) being the Central Excise duty short-paid by them during the period August, 1977 to April, 1978, February, 1979 and March, 1979, as mentioned in the R.T. 12 returns for the respective months, and also quantified in this office show cause notice C. No. V/34/3/139 M.P.II dated 24-5-79, under Rule 10 of the Central Excise Rules, 1944, read with Section 1