Per Shri R. Jayaraman - Both the appeals, one from the assessee and another from the revenue are against the same Order-in-Original passed by the Collector of Central Excise, Ahmedabad vide Order-in-Original No. 13/Collr/l 989 dated 27.9.1989.

1.1 In the appeal from M/s. Reliance Industries, the only relief claimed is that no penalty Rule 173Q is imposable on them and the amount of Rs. 1/- crore imposed as penalty on them is not legally sustainable. Hence the Collector's order to that extent should be modified and the amount of Rs. 1/- crore imposed as penalty be taken towards interest payable on the wrong credit taken in July, 1983 due to bonafide clerical error.

1.2 In the appeal from the Revenue, they have found fault with Collector's findings giving M/s. Reliance Industries a clear chit with regard to allegation of fraud, collusion, wilful misstatement etc. and failure to consider the evidences and case laws properly on account of which lower penalty has been imposed, which calls for enhancement.

1.3 The facts, in brief, are that M/s. Reliance Industries are alleged to have taken false credit to the extent to Rs. 1.17 crores during July, 1983 and the false credit, was detected on receipt of specific information. In the course of investigations with the concerned staff of the factory maintaining the record, it was revealed that the credit was deliberately taken without any authority under the instructions of their Director and one Shri Pai, assisting Shri N.H. Ambani in financial matters, Statements of a number of persons connected with finance management, audit of the accounts, excise in charge of the unit, were recorded and it was alleged that the wrong credit was taken deliberately with intention to evade duty on the final products and proposed to impose penalty. Since Reliance admitted of wrong credit and paid up the duty to the extent of Rs. 1.17 crores, this payment made was proposed to be confirmed. Hence show cause notice was issued by the Collector against M/s. Reliance In3ustries Ltd. for confirming the demand for duty (already  paid) invoking the proviso to section 11A of the Act and for imposing penalty under Rule 173Q (a) and(d) of Central Excise rules. In the adjudication proceedings held by the Collector, he did not choose to rely on the statements of two officers of Reliance Industries on the ground that they are co-accused in the prosecution launched by the Department and extended period is not applicable. All the same, he confirmed the duty demand for Rs. 1.17 crores on the ground that the amount is legally payable to the Department. He also rejected their offer of interest and imposed as penalty of Rs. 1/- crore on M/s. Reliance Industries Ltd.

2. The present appeals are against the said order.

3. Shri J. J. Bhatt, the Ld. Advocate on behalf of M/s. Reliance Industries and Shri K.P, Mishra on behalf of the Revenue advanced elaborate arguments for supporting these appeals. For the sake of brevity we are not separately recording their arguments; but highlight them at the appropriate places in, our findings.

4. After hearing both the sides, we find that the admitted position is that a credit of about Rs. 1.17 crores was taken in excess in RG 23 part II account, by taking double the amount of credit and shown as opening balance at page 81 of RG 23 Part D record.

4.1 On scrutiny of the extracts of RG23 part-ll, we find the following position. As per the Assistant Collector's letter dated 7.7.83, the following credits were .permitted and noted against No. 2307 dated 8.7.83 (page 78). ' '

The total at page 78 is in respect of fresh credit allowed as per Assistant Collector's letter dated 7.7.83 was shown at the bottom of the page as indicated above. On page 79 to 80 of the register, the opening balance and total of fresh credit allowed is shown as the same as abov