Customs, Excise and Gold Tribunal - Delhi
Shanti Vrat And Sons Pvt. Ltd. vs Commissioner Of C. Ex. on 19 August, 1997
Equivalent citations: 1998(99)ELT153(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from Order-in-Appeal dated 27-9-1996 passed by Commissioner (Appeals), Allahabad by which he has modified the Order-in-Original to the extent that the redemption fine has been reduced to Rs. 1,30,000/- and penalty to Rs. 50,000/-, as against the confirmation of duty amount of Rs. 58/- and imposition of redemption fine of Rs. 3,50,000/- in respect of goods confiscated in the Panchnama/Recovery Memo dated 22-9-1995 under Rule 173Q of Central Excise Rules, 1944, the original order had imposed a penalty of Rs. 1 lakh under Rule 52A and Rule 173Q read with Rule 226 of Central Excise Rules, 1944.
2. The facts of the case are that on an intelligence received by deptt. that the appellants were engaged in suppression of their production and were clearing the same clandestinely without discharging the duty liability due thereon and were also storing their product unaccounted for in their statutory records; a team of officers of Central Excise, headed by Superintendent, Central Excise, Agra, visited the factory on 22-9-1995.
3. Sr. Executive Shri P.K. Datta was present at the time of visit of the officers. On demand by the officers, Shri Dutta produced the statutory records being maintained by them before the officers for scrutiny. Thereafter, two independent witnesses were called and the officers, took a round in the factory premises along with the said person and the two independent witnesses and found the said party engaged in the manufacture and clearance of C.I. Casting articles, pipes, pipe fittings and manhole covers falling under Chapter 73 of Central Excise Tariff Act. The officers conducted the physical stock verification of fully finished excisable goods on drawal of Physical Stock Verification Report dated 22-9-1995, in the presence of the said person and witnesses found an excess of 49.038 m.t. of various types of the said goods stored by the party unaccounted for over and above the recorded balance in the RG 1 register of the said party written upto 18-9-1995 showing the opening balance. Apart from this the officers also found a shortage of 98.000 kgs. of various types of the said goods which appeared to have been removed by the party clandestinely without discharging the duty liability due thereon.
The written statement was recorded from the said person who stated inter alia as follows :
"1. He is looking after the entire work of production, clearances and other work of the factory in the absence of the other directors of the firm.
2. The RG 1 register was written upto 18-9-1995 as showing the opening balance of that day and quantity of excess excisable goods found by the officers, was the production from 18-9-1995 to 21-9-1995 and there was no production on 22-9-1995 before the arrival of the officers in the factory.
3. They have only issued the challan and the value of the excisable goods found short as per their details incorporated in the Physical Stock Verification Report dated 22-9-1995, was not given by them on the said challans and neither they have issued any bill /invoice nor they have entered the same in their RG 1 register and were cleared without payment of appropriate duty due thereon.
4. Due to ignorance of Central Excise Laws they could neither update their RG 1 register nor could they issue the Bills/Invoices for the goods cleared from their factory since 18-9-1995.
5. The Brands 'SRIF-SUPER' and 'S.V.' is their own brand and they have declared the same in their Modvat declaration filed with the department and the same has not yet been got registered in their name. Also they have not filed any declaration under Rule 57H for claiming Modvat credit on the raw material with the department.
6. He is satisfied with the Physical Stock Verification Report drawn on 22-9-1995, in his presence and have signed the same in token of his agreement."
The party however, could not produce any satisfactory evidence/explanation for the excess quantity of 49,038 m.t. of various types of the said goods valued at Rs. 5,88,456/-, the value declared by the said person involving duty amount of Rs. 29,422.80. Therefore, it was presumed that they had an intention to suppress their production and to clear the same clandestinely without discharging the duty liability due thereon and therefore, it was alleged that the goods were liable to its confiscation under Rule 173Q of Central Excise Rules, 1944.
4. After giving an opportunity of hearing, ld. Asstt. Collector held that they had not given a satisfactory explanation except their unfounded plea that -they being new to Central Excise were not having experience with regard to maintenance of records which resulted in their failure in updating the same. The Asstt. Collector also held that they had not been able to adduce any evidence/explanation in respect of goods found to be short as against the recorded balance. Therefore, he held that the party directly or indirectly had admitted the contravention of the various rules with regard to non-maintenance of records and goods found to be short. Therefore, he held that their plea had not been supported by any corroboratory evidence which could show that the excess stock was the production of the dates from 18-9-1996 to 21-9-1996. He has held that as per their record the total production up to the date of seizure (265.298 m.t. approximately) shown approx. ten time less than it could have been on the pro rata basis for a period of 5 months and 18 days (approx. 140 working days) at 16.346 m.t. per day. Therefore, he has held that the party's plea that the seized quantity of C.I. Casting was the production of only three days prior to seizure is not tenable and the same was the deliberate action to clear the goods clandestinely as they had not adduced any evidence in respect of goods found to be short and therefore, they are liable to be imposed with the redemption fine and duty of Rs. 58/- on excisable goods found short and also being imposed with penalty of Rs. one lakh.
5. Ld. Advocate submitted that there was no mala fide intention to clear the goods clandestine nor the goods had been cleared. All other records had been up-to-date pertaining to inputs and utilization. The goods cannot be confiscated and the same were lying within the factory. In this regard he relied on the judgment rendered in the case of Balls and Cylpebs Ltd. v. Collector of Central Excise, Allahabad as reported in 1996 (15) RLT 560 and that of Pooja Forge Pvt. Ltd. v. Collector of Central Excise as reported in 1996 (84) E.L.T. 37 and Kartar Steels Pvt, Ltd. v. Collector of Central Excise, Chandigarh as reported in 1997 (18) RLT 138. He also submitted that the order pertaining to the production figures and arriving at the figure of 16.346 m.t. per day was not alleged in the show cause notice and therefore, in terms of the judgment rendered in the case of Raphael Pharmaceuticals Pvt. Ltd. v. Supdt. of Distilleries as reported in 1988 (38) E.L.T. 11 and that of Amco Electronics v. Collector of Customs as reported in 1992 (61) E.L.T. 650. The orders are required to be set aside for having gone beyond the terms of the show cause notice.
He submitted that the party has already deposited the duty for short of Rs. 58/- and does not want to contest on this. As regards excess goods found by the department and duty of Rs. 29,422.80, they had not removed the goods from the factory and the goods are still lying there. The goods had not been removed as the redemption fine was excess and the question of deposit of duty at this stage does not arise and it is required to be deposited at the time of clearance of the goods. In this regard he also pointed to the order passed by the Tribunal at the stay stage granting waiver of pre-deposit of this sum.
6. Ld. DR pointed out that the goods are liable for confiscation, if the procedure has not been followed pertaining to the goods found in excess or short. In this regard he relied on the judgment rendered in the case of Gujarat Travancore Agency v. Commissioner of Income Tax as reported in 1989 (42) E.L.T. 350 (S.C.), Collector of Central Excise, Madras v. Ultra Marine & Pigments Ltd. as reported in 1985 (22) E.L.T. 413 and that of Autolite (India) Ltd. v. Collector of Central Excise, Jaipur as reported in 1997 (20) RLT 123.
7. I have carefully considered the submissions made by both the sides. Ld. Counsel does not contest the deposit of Rs. 58/- being the duty confirmed in respect of shortage of goods. Ld. Counsel has contested only on the imposition of redemption fine and penalty. In the case of M/s. Balls and Cylpebs Ltd. (supra), this bench has considered in detail pertaining to confiscation of goods lying in the factory. I have carefully considered the judgments of this bench wherein it has been held that those goods lying in the bonded store room, cannot be confiscated and only those goods which are already in packed condition or in condition of preparation of removal without payment of duty and have been seized while being transported without accompanying gate passes without payment of duty. It has been held that in circumstances where the goods are still lying in the factory then such goods cannot be confiscated. This judgment has been rendered in the light of the earlier judgment rendered in the case of Garden Silk Mills v. Collector of Central Excise as reported in 1991 (51) E.L.T. 373, New Polymer Industries v. Collector of Central Excise as reported in 1991 (52) E.L.T. 145, Western Transformer & Equipment v. Collector of Central Excise as reported in 1995 (9) RLT 15 and the case of Pooja Forge Pvt. Ltd. v. Collector of Central Excise as reported in 1996 (84) E.L.T. 37 (Tri.). The Tribunal has also considered the judgment of Southern Steel Ltd. v. Union of India as reported in 1979 (4) E.L.T. 402. The Tribunal further on examination found that penalty is imposable for non-maintenance of records. In this regard the Tribunal had relied on the judgment rendered in the case of Indian Cork Mills Ltd. v. Collector of Central Excise as reported in 1984 (17) E.L.T. 513 (Tri.) and that of Snack Foods Pvt. Ltd. v. Collector of Central Excise as reported in 1987 (31) E.L.T. 231 (Tri.). I have looked into all these judgments and appreciating the facts in question, I notice that the appellants had explained that they had not entered the production figures from 18-9-1995 to 21-9-1995 and there was no intention of removing the goods. The goods were not found to be in packed condition, nor were they in preparation of leaving the factory in the form of being loaded in the lorry or in the process of being loaded in the lorry. The goods were lying in the bonded store room. There is no allegation that how the goods were in a state of preparation of removal and they would have left without payment of duty clandestinely, by the department in the show cause notice. The appellants had entered all other registers and challans. They had not entered in RG 1 register nor they had issued the bills/invoice. As the goods seized were not in a preparation of leaving the factory but they merely had not been entered in RG 1 register, therefore, a presumption pertaining to its clandestine removal cannot be drawn in terms of the law cited and noted above. Hence following the ratio of the judgments cited by the Counsel, the confiscation fine in respect of the goods lying within the factory is required to be set aside. As regards the imposition of penalty for non-maintenance of records up-to-date, the Tribunal has looked into this aspect in the light of the several judgments as noted in the case of M/s. Balls and Cylpebs Ltd. (supra) and penalty has been confirmed. Looking into totality of all facts and circumstances, the penalty of Rs. 5,000/- in this case is appropriate. Therefore, the confiscation fine imposed in this case is set aside and penalty is reduced to Rs. 5,000/-. Ordered accordingly.