Customs, Excise and Gold Tribunal - Mumbai
Alpha Foam Ltd. vs Commissioner Of Central Excise on 16 February, 2004
ORDER K.D. Mankar, Member (T)
1. Briefly stated, issue involved in this case is that, the premises of M/s. Alpha Foam at Gat No. 299, Nanekarwadi, Chakan, were visited on 29.9.99 by Divisional Preventive Party. During visit it was revealed that, stock of finished goods lying in the assessee's 'bonded store room' was shown 'nil' in the relevant columns of RG 1 register though certain quantity of finished goods was lying in the factory. The reason given for not accounting was that, there was practice of accounting goods, only at the time of its clearance. The officers seized the stock of finished goods totally valued at Rs. 15,34,156/- lying in the appellants said premises but not accounted for in RG-1 register. Further, when panchanama proceedings were in progress, one vehicle bearing registration No. MH 14F 1853 was seen entering appellant's said premises. On being asked, the driver of the vehicle could not produce any duty paying documents in respect of goods in the vehicle. It was observed that, the vehicle was loaded with 130 Nos. of 'locators' (MV parts) valued at Rs. 6,500/- and 3 moulds for which driver was having 3 challans issued by the appellant's other unit, located at Bhosari under Rule 57S, for movement of moulds. As the goods were cleared by appellant's other unit at Gat No. 310 and they were having similar practice of accounting, the finished goods totally valued at Rs. 9,45,860/- lying in the said premises which were not accounted for, were also seized under regular panchanama dated 29.9.99. Statement of Shri S.N. Gunjal, Plant Manager was recorded on 2.10.99. He stated that Shri Waghole was preparing records of daily production and consumption of raw material. These records were submitted to him and based on these records monthly reports were prepared. He stated that the monthly statement so prepared was authentic and genuine and were based on actual production and consumption. He further stated that the goods manufactured were subjected to quality checks and after the necessary checks, the same are considered as manufactured and accounted for in their private records. He further stated that, the quantity of finished goods, as appearing in monthly production report and stock of finished goods, are fully finished goods which are ready for despatch. It was alleged, based on investigation that the actual clearances effected by the appellants as per their private records were more than the clearances as shown in the RG-1 register. Therefore the appellants were required to pay duty of Rs. 2,27582.00/-, on the clearance in excess of those shown in the RG-1 register.
2. Against the confirmation of duty demand, the appellants preferred an appeal to the Commissioner (Appeals), who in his finding recorded, in the impugned order observed as under:
"I find that sole ground for demanding duty of Rs. 2,27,582/- was difference between figures shown in daily production reports and RG-1. These daily production reports are said to he implemented for ISO 9000 and appellants have pointed out discrepancies which show that the reports are fall of errors and overwriting. Also Department has not made farther investigation in respect of entries of clearances shown in daily production which are not reflected in RG-I. Corroborative evidence is not adduced in the form of documents or statements as to where the same have been clandestinely removed. Simply these figures have been taken as authentic and demand has been worked out. There are cases where clearance of particular item is appearing in RG-1 which is not appearing in daily production report I find that duty demand of Rs. 2,27,582/- and penalty of Rs. 227,582/- under Section 11AC therefore are set aside."
3. Similarly, the Commissioner (Appeals), also held that the allegation regarding replacement of goods received under Rule 57F (4) challan is also vague and without any corroborative evidence.
4. The Commissioner (Appeals) has, however confirmed the duty of demand of Rs. 1,040/- and equivalent amount of penalty of Rs. 1,040/-, and reduced the penalty from Rs. 75,000/- to Rs. 7,000/-. The penalty of Rs. 1,00,000/- imposed on Shri Rajeev Ranka was also set aside as the statement of various persons recorded did not implicate Shri. Rajeev Ranka. The Commissioner (Appeals) also reduced the Bank Guarantee encashment amount from Rs. 6,24,000/- to Rs. 1,00,000/-. The penalty imposed on the appellant under Rule 173Q was reduced from Rs.2,50,000/- to Rs. 1,00,000/-.
5. Heard both sides.
6. I have gone through the submissions made during the hearing and perused the records. In the appeals it has been prayed to set-aside the order requiring payment of redemption fine of Rs. 1,00,000/-, and penalty of Rs. 1,00,000/- imposed under Rule 173Q.
7. So far as, the first ground in the appeal is concerned, I note that, the appellate authority has recorded the finding to the effect that the entries in the daily production reports maintained for the purposes of implementing ISO 9000 and RG-1 are self-contradictory. It is particularly noted that that what is recorded in RG-1 is not recorded in ISO records and vice versa. Hence the demand for Rs. 2,27,582/- and equivalent penalty has been set aside. It is also further held that the said amount of Rs. 2,27,582/- is not apportioned between non-accounted quantity and that relating to quantity of fresh raw material despatched against job work challans under Rule 57F (4).
8. Once the above position is admitted, it is clear that the charge of failure to fully account for finished goods in the RGI records or removal of virgin. Material against challans under Rule 57F (4) or non-receipt of input material against the corresponding challans as made out in the show cause notice must fail. There is no cross appeal from the revenue challenging the findings of the Commissioner (Appeals) as recorded above.
9. Despite the above findings the Commissioner (Appeals) has proceeded to confirm the confiscation though he reduced the redemption fine. This finding cannot be sustained for the reason that the Commissioner (Appeals) himself accepted the system of accounting adopted by the appellants in his findings and did not accept the charge of non-accounted of goods in the RG-1, Consequently redemption fine of Rs. 1,00,000/- and the penalty of Rs. 1,00,000/- are required to be set aside and are so set aside.
8. Accordingly the appeals succeeded and the same are allowed with consequential reliefs in the accordance with law.
(Operative part pronounced in Court)