Customs, Excise and Gold Tribunal - Delhi
Arora Products vs Commissioner Of C. Ex. on 23 July, 2002
Equivalent citations: 2002ECR398(TRI.-DELHI), 2003(152)ELT69(TRI-DEL)
ORDER Krishna Kumar, Member (J)
1. These are the two appeals filed by the appellants against the common Order dated 17-8-2000 passed by the Commissioner of Central Excise (Appeals), Jaipur. Since the issue in both the appeals is the same, they are being disposed of by this common order.
2. Shri D.N. Mehta, learned Advocate has appeared on behalf of the appellants and submitted that the appellants are engaged in the manufacture of chewing tobacco falling under Chapter Heading 2404.40 of the Schedule to the Central Excise Tariff Act, 1985. A preventive party visited the appellants factory in December, 97 and found that the RG-1 register was written by the appellants up to 1-12-97 and that the goods manufactured on 2nd and 3rd December, 97 had not been entered in the RGl register. It was explained to the officers that this omission has occurred due to the illness of appellant's daughter who had to be admitted in Nursing Home. The balance in stock as per the entry in RG 1 register on 1-12-97 was 570.500 Kgs. In addition, there was a stock of 320.640 Kgs. which was the production of 3 days i.e. 2nd to 4th Dec. 97 and was yet to be entered in the RGl register and the same were found scattered around the pouch filling machine. Further the officers found that Form-4 register showed a balance of 3724 Kgs as on 1.12.97 whereas the actual on physical verification was found to be 1592 Kgs. He drew my attention to para 6 of the Order-in-Original wherein Shri Anand Prakash Arora, Proprietor of M/s. Arora Products in his voluntary statement tendered under Section 14 of the Central Excise Act, 1944, on 18-2-97 admitted that the goods which were accounted after their packing at the time of physical verification were related to the production of 2nd to 4th December, 97. He also admitted that his daughter was admitted in a Nursing Home and due to that he could not sit in the factory and entries had not been made for 2nd to 4th December, 97. Learned Advocate contended that the impugned order is not speaking inasmuch as it does not deal with the plausibility of the explanation furnished which was factually correct. The impugned order completely over looks the circumstances in which the lapses which were not deliberately occurred; that the lower authorities erred in assuming without any proof that the shortages noticed, which were genuine and duly explained, were due to alleged clandestine clearances; that the lower authorities ought to have taken note of the stock of rava and moti patti lying in the appellant's factory while deciding the matter rather than dismissing this plea out of hand; that the lower authorities ought to have taken the extenuating circumstances of the case in deciding the matter and accordingly refrained from taking a harsh view of the matter by not only demanding duty without taking due note of the explanation regarding the shortage, the existence of rava and moti patti in stock which too have been treated as shortages and the fact of payment of duty even though belatedly on the clearances that had been effected by the appellant's son without invoice and payment of duty in the unavoidable absence of the appellant; that the lower authorities ought to have given due consideration to the small size of the appellants' establishment which did not justify heavy disproportionate penalty on the appellant, when the lapses noticed were in fact more in the nature of improper maintenance of accounts due to unavoidable absence of the appellant from the factory at the material time; that shrinkage up to 13% would have been allowed; in support of his contention, he relied on the decision in the case of Tirupati Cigaretttes reported in 2000 (121) E.L.T. page 81 and another case reported in 2000 (117) E.L.T. 644; he contended that the sole proprietary firm and its proprietor cannot be treated as different entity and as such it would not be legally permissible to impose penalty both on the firm and on the sole proprietor; that in order to prove clandestine removal, positive proof is required as held in Kothari Products Ltd. and Others reported in 1999 (82) ECR page 33 (T); to the same effect is the case of Kabra Enterprises and others reported in 2000 (92) ECR page 373 (T); that he submitted that the real shortage in the present case is to the extent of 0.8% of the total receipt; that while imposing the penalty, strict proof of mens rea is required; that in this regard, he relied on the decision in the case of Atlas Wires P. Ltd. reported in 1995 (75) E.LT. page 719 and BPL Ltd. reported in 2000 (92) ECR page 692.
3. Shri B.C. Mahay, learned DR appearing on behalf of the Revenue contended that the appellant is a habitual offender; that the appellants have never claimed any shortage; that the items in question come in dry state; that there is no rule for allowance for drying in percentage; that it is only on the visit of the officers that they are pointing out all these things which are nothing but an after-thought; that the learned DR reiterated the findings of the lower authorities.
4. After hearing the rival submissions, perusal of the records and the case laws cited by the learned Counsel, I find that the case in hand is squarely covered by the above decisions and the Revenue has clearly failed to bring on record any positive evidence to substantiate the allegations and in these circumstances, both the appeals are allowed and the impugned order is set aside.