Customs, Excise and Gold Tribunal - Delhi
Corona Cosmetics And Chemicals (P) Ltd. vs Collector Of C. Ex. on 6 November, 1989
Equivalent citations: 1990ECR223(TRI.-DELHI), 1991(55)ELT118(TRI-DEL)
ORDER P.C. Jain, Member (T)
1. The Preventive Officers of the Central Excise Headquarters Office visited the appellant's factory, on an intelligence and checked the stocks of the factory. They found 41 cartons (36 cartons of plus detergent cakes-250 gms and 5 cartons of detergent cakes -125 gms.) in excess over the recorded balance in R.G. 1. They also found stocks of detergent cakes and Tata's 501 bar at other places in the factory.
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Name of goods Quantity Value
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Plus Detergent (250 Gms.) 767 Cartons Rs. 1,02,946.74 Plus Detergent (125 Gms.) 606 Cartons Rs. 85,112.70 Tata's 501 4 Cartons Rs. 552.72
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Total 1,377 Cartons Rs. 1,88,612.16
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1.1 The officers also could lay their hands on three private registers in which day's production was being shown datewise and one laabour attendance register in which too the production was shown. It is the allegation of the department that the details of the production shown in these registers have never been carried over in the R.G. 1 which, according to the department, is an evidence that the appellants had cleared the following goods in a manner other than provided under Central Excise Rules without payment of Central Excise duty :-
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Name of goods Quantity Value Excise Duty
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1. Plus 250 gms. 18,407 Rs. 24,70,587.50 Cartons
2. Plus 125 Gms 6,527 Rs. 9,16,717.15 Rs. 89,302.74 Cartons
3. 501 Bar 7,800 Rs. 10,77,804.00 Cartons
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Total 32,734 Rs. 44,65,108.70 Rs. 89,302.74
Cartons
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1.2 On the day of visit the appellants could not produce the raw material register in form IV on the ground that the concerned person who maintained the record was on leave.
13 On 5-7-1985, Shri Pradeep Saraswat, Production Superintendent of the appellants was interrogated to explain the difference in the production shown in R.G. 1 register and private registers. Department's allegation is that he failed to explain the difference and hence the allegation of removal of 32,734 cartons of detergent cakes and 501 bar valued at Rs. 44,65,108.70 involving an excise duty of Rs. 89,302.74.
1.4 A show cause notice dated 19-9-1985 alleging contravention of Rules 9,47, 49, 52, 52A, 53,173F, 173G and 226 of the Central Excise Rules by the appellants, was issued.
1.5 On adjudication, it has been held by the Collector that the appellants have been showing the stock of detergent cakes in R.G. 1 at a stage when they were packed in cartons and this practice had also the approval of jurisdictional Assistant Collector. Regarding the 472 cartons including 41 cartons in the BSR found in excess, the adjudicating authority did not agree with the plea of the appellants that these were part of the day's production and the entry had to be made only at the end of the day, since some of the cartons which were fit for entry in R.G. 1 were still lying out of the BSR and within the factory. In. other words, the process of taking the goods into BSR was still in continuation. As per the remaining 501 cartons the appellants had pleaded before the Collector that these were not ready for being entered in the R.G. 1 register because they had not yet attained the R.G. 1 stage. The Collector has held that in any case these cartons ought to have been entered in column 15 pertaining to stock "in finishing room". He, therefore, upheld the contravention of Rules 53,173G and 226 in respect of the above mentioned 472 cartons of detergent cakes. For the remaining 905 cartons the Collector accepted the plea of the appellants having regard to the practice of stage of entry in R.G. 1. Since the goods had been provisionally released on execution of a bond the Collector appropriated an amount of Rs. 5,000/- from the security for the bond. In addition, he imposed a penalty of Rs. 1.000/- on the appellants under Rule 173Q of the Central Excise Rules.
2. With regard to the aforesaid finding on appropriation of security and imposition of penalty, the learned advocate Shri J. Banerjee for the appellants has urged that the Collector has failed to appreciate that the detergent cakes found outside the bonded store room was not ready for accounting in the R.G. 1 register inasmuch as many cakes were not even wrapped, many were awaiting sealing, many were kept in old cartons without counting pending receipt of new cartons and others were awaiting counting, checking and gum taping before removal to the bonded store room and entry thereafter in the R.G. 1 register.
3. On the other hand, learned SDR Shri R. M. Ramchandani reiterates the findings of the adjudicating authority.
4. We have carefully considered the pleas advanced on both sides on this issue and we are inclined to agree with the Collector. We find from the Collector's finding, already recorded, that he has already given the benefit to the appellants about the 905 cartons which were not fit for entry in R.G. 1. The Collector has made his finding only in respect of 472 cartons which were duly taped and sealed. Therefore, the Collector is right in holding that in any case these were fit to be entered in R.G. 1 in the column of stocks "in finishing room". It is not the case of the appellants that all these 472 cartons were taped only during the day when the Central Excise Preventive Officers visited the factory. We, therefore, do not find any reason to interfere with the Collector's findings on the aforesaid goods being liable to confiscation and, since the goods had already been released, in appropriating an amount of Rs. 5,000/- taken as security for provisional release of the goods under a bond; we also uphold the amount of penalty of Rs. 1,000/- imposed on the appellants on this count.
5. Next issue is regarding the alleged removal of 32,734 cartons of plus detergent cakes and 500 bars without payment of duty. On adjudication, the Collector has held that 7800 cartons of 501 bars have been duly accounted for by the appellants and therefore, he drops the charge of clandestine removal of those 501 bars. However, he upholds the charge of removal of detergent cakes of 250 gms. and 125 gms. of the remaining cartons as alleged. The appellants had pleaded that on some dates production had been entered in R.G. 1 and not shown in private records on the basis of which the charge of clandestine removal has been alleged. Against some dates production is entered in R.G. 1 as well as in private accounts but figures of production do not tally according to the appellants, because the department's charge also included hand wrapped cakes whereas the cakes are required to be sealed on the sealing machines packed in new cartons and gum taped. The appellants had also contended before the Collector that both new and printed, old and used cartons filled with hand wrapped cakes are entered in private records whereas the new and fresh cartons duly sealed and taped when ready for marking are entered in R.G. 1, from the private records. According to the appellants, total number of old cartons containing hand wrapped cakes taken as fully manufactured cartons in the department's chart (enclosed with the show cause notice) have been sorted out and the figures of such incomplete and unsorted material were given to the Collector during the course of adjudication. It was pointed out that such old cartons were 4056 from 18-2-1985 to 18-6-1985 in the category of 125 gms. cakes and there were 5320 old cartons during the period 18-2-1985 to 16-6-1985 in the category of 250 gms cakes. It was also urged that day-to-day tallying of entries between the private accounts on which the charge of clandestine removal is based and the R.G. 1 is not possible because the purpose of different registers is different as explained by their production Superintendent Shri P. Saraswat. The learned advocate for the appellants relied upon strongly on the following para of his statement dated 5-7-1985 recorded in Hindi (translated in English) :-
"The officers enquired as to how production shown in cartons entered in labour registers is shown in R.G. 1. In this connection I have to state that the cartons that are shown in this register is the day's work. In our factory the packing is done in two ways, (1) Packing by hand for which sealing is done later, and the cakes are packed in cartons which are taped and then entered in R.G. 1 (2) In our factory another type of packing is on jigs and thereafter the cakes are filled in cartons, which are checked by quality controller then the cartons are taped and entered in R.G. 1. In both types of packing there is wastage and the damaged cakes do not figure in R.G. 1. These cakes are recycled gradually to manufacture fresh cakes. The wastage in packing cannot be precisely depicted. The officers further enquired why production entries in R.G. 1 and labour payment registers do not tally. About this question I have stated in preceding lines."
5.1 It was also pointed out to the Collector that private records are not production records is substantially proved from total number of cartons shown in R.G. 1 and in the production records as follows :-
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Plus 125 gms. Plus 250 gms.
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(1) Production RG-1 10,709 20,891
(2) -do- (Private records 6,527 18,407
from 2/85 to 6/85)
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6. The Collector has held that the above explanation of the appellants is too general and even if one agrees to go by the explanation one finds it difficult as to why the entries in the R.G. 1 should be more than the entries in the private register. Further, if no correlation can be made between the private register and R.G. 1 register, there is no purpose of maintaining two sets of registers on the part of the licensee. He has further observed that if the explanation would have been that the entries in the private register in respect of plus 250/125 gms. are marginally in excess of those entries in the R.G. 1 there would have been some force in the appellants' explanation that all the productions are not entered in R.G. 1 register and that on several dates packed cartons could not be accounted for in R.G. 1 and that some quantity was wasted during packing, wrapping etc. Accordingly, he did not accept the defence of the appellants and held that the production shown in the private accounts has not been accounted for at all in the R.G. 1 and as such has been clandestinely removed. The Collector, therefore, has demanded duty to the tune of Rs. 7,77,460.93 on plus 250 gms. and plus 125 gms. cakes detergent. He also imposed a penalty of Rs. 60,000/-
7. With regard to the aforesaid finding of the Collector regarding there being the excess entry in R.G. 1 over that of private accounts the appellants have urged that the Collector did not appreciate the contents of statement of Shri P. Saraswat and thus came to an erroneous conclusion. The Production Supdt. Shri P. Saraswat clearly stated that wastage occurs in both types of packing and gradually recycled and this quantity did not figure in R.G. 1. The Collector also did not appreciate that when hand packed cakes of detergents are taken out for jigs packing, entry already made in the production register for hand packed cakes remains. They have also relied upon the comparative statement of production referred to in the list of documents relied upon at S. No. 6 of the list given in the show cause notice. They pointed out that during the month of February 1985 the R.G. 1 figures for 501 bars, plus 250 gms. and plus 125 gms. bars are shown as nil, 2003 cartons and 3458 cartons respectively. The private records show the production as 3079 cartons, nil and 1346 cartons only. Similar wide variations, according to the appellants, are noticed in other months also which only impeaches the correctness of the private records. This also shows that the purposes of the aforesaid private accounts are totally different and no conclusion regarding production can be drawn therefrom.
8. We have carefully considered the pleas advanced on both sides. We find from the statement of Shri P. Saraswat, Production Supdt. that production cannot be determined with any amount of accuracy from the private accounts. The purposes of these private accounts as explained by the Production Supdt. are different. In any case as held by the Collector that during the period February 1985 to June 1985 production in R.G. 1 is greater than that shown in the private records, it will, therefore, be too far fetched to conclude that the production as shown in private records though for different purposes is not included at all in the R.G. 1. For such a conclusion some more evidence is required regarding consumption of raw material or sale of such goods alleged to have been produced in excess by the appellants. Obviously such evidence is lacking. In the circumstances, we cannot hold that the production shown in the private records has not been included at all by the appellants in their R.G. 1 and has thus been clandestinely removed. Accordingly, the demand of duty to the tune of Rs. 7,77,460.93 and imposition of penalty to the tune of Rs. 60,000/- are not sustainable.
9. Appeal disposed of in the above terms.