Customs, Excise and Gold Tribunal - Delhi
Premium Mouldings And Pressing Pvt. ... vs Cce on 26 March, 2004
Equivalent citations: 2004(94)ECC594, 2004(175)ELT418(TRI-DEL)
ORDER P.G. Chacko, Member (J)
1. The appellants are manufacturers of Steering Wheels and other motor vehicle parts. On 7.2.2001, officers of Central Excise visited their factory and found excess stock of both finished goods and raw materials. 482 Nos. of Steering Wheels valued at Rs. 1,03,984 and 2.025 MTs of Iron and Steel Scrap valued at Rs. 13,162 were found in excess vis-a-vis RG-1. Various Cenvatable inputs totally valued at Rs. 7,16,979 were also found in excess of the balance recorded in "raw material stock summary". All the materials found in excess were seized by the officers who believed that the goods were liable to confiscation. A statement of Shri Harish Chandran, Manager (Accounts) and Authorised Signatory of the Company, was also recorded. Shri Harish Chandran was satisfied with the manner of-stock-taking and he admitted the excess stock. He, however, could not explain the discrepancy. The Department, by show-cause notice, proposed to confiscate the seized goods under Rule 173-Q of the Central Excise Rules, 1944 as also to impose penalty on the party under the said Rule. The proposals were contested. The adjudicating authority confiscated the goods with option to the party to redeem the same against payment of a fine of Rs. 2 lakhs. It also imposed a penalty of Rs. 50,000 on the party. The appeal preferred by the assessee against the decision of the original authority did not succeed before the Commissioner (Appeals). Hence, the present appeal.
2. Heard both the sides. The Counsel for the appellants submits that neither confiscation nor penalty can be sustained on any ground relatable to the seized inputs inasmuch as Rule 173-Q is not applicable to inputs. In this connection, the Counsel relies on the Tribunal's decision in CCE, Indore v. Ajmer Food Industries, 2004 (60) RLT 297. With regard to finished goods confiscated by the lower authorities, Counsel submits that, apparently, the goods have been confiscated on the basis of the confessional statement of Shri Harish Chandran. Shri Harish Chandran was only Incharge of accounts of the Company at the material time and was not competent to comment on the excess stock of materials. According to the Counsel, Shri Harish Chandran's statement has no evidentiary value insofar as stock discrepancy is concerned. Therefore, Counsel submits, the order of confiscation of the finished goods and consequential penalty cannot be sustained. Without prejudice to this plea, the Counsel submits that the fine and penalty imposed are too high.
3. The DR submits that Shri Harish Chandran was the authorised signatory of the company and was competent to give the statement at the material time. He clearly admitted the excess stock. With regard to the Counsel's contention that Rule 173-Q is not applicable to inputs, the DR cites the Tribunal's decision in Laxmi Polypack v. CCE, Hyderabad, 2003 (86) ECC 63 (Tri.) : 2003 (56) RLT 64.
4. I have considered the submissions. On a perusal of Rule 173-Q, I find that this Rule could apply to cases involving contravention of law in regard to "excisable goods manufactured, produced or stored by the manufacturer". The Rule is explicit and is only applicable to cases involving contravention of law in relation to finished goods. It is not applicable to inputs as held by this Tribunal in the case of Ajmer Food Industries. The order of confiscation and penalty to the extent it relates to the seized inputs cannot be sustained. The position is diametrically opposite as far as the seized finished goods are concerned. Excess stock of finished goods is admitted. The Authorised Signatory of the appellant-company conceded his inability to explain the excess vis-a-vis the balance recorded in RG-I. The statement of the Authorised Signatory was never retracted. The Counsel's argument that Shri Harish Chandran was not competent to explain any discrepancy of stock is not tenable. Had Shri Harish Chandran not been competent for the purpose, he should have named the competent functionary who could explain the facts. Since the excess unaccounted stock of finished goods is admitted, its liability for confiscation stands established. However, a fine of Rs. 2 lakhs cannot be accepted for redemption of finished goods valued at around Rs. 1 lakh. That fine was determined in relation to both inputs and finished goods, among which the value of the former predominated. Section 34 of the Central Excise Act, which provides for imposition of fine in lieu of confiscation, does not lay down any criterion for determination of the redemption fine. The law apparently has left the same to the discretion of the quasi-judicial authority working under the Act. Having regard to the fact that the inputs valued over Rs. seven lakhs are not liable to confiscation under Rule 173-Q and in other facts and circumstances of the case, I reduce the quantum of redemption fine to Rs. 10,000. Proportionately, the quantum of penalty gets reduced to Rs. 5,000. I am told that an amount of Rs. 5,000 stands deposited with the Department, which can be appropriated towards penalty on the appellants under Rule 173-Q.
5. The impugned order stands modified to the above extent and the appeal gets disposed of.