Custom, Excise & Service Tax Tribunal
Cce, Ludhiana vs M/S Nandan Auto Tech Ltd on 1 September, 2010
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R. K. Puram, New Delhi COURT-IV Date of hearing: 1.9.2010 Excise Appeal No. 2436 of 2006-SM [Arising out of Order-in-Original No. 55/CE/JC/Ldh/05 dated 4.1.2006 passed by the Commissioner (Appeals), Central Excise, Chandigarh] For approval and signature: Honble Mr. M. Veeraiyan, Member (Technical) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982. 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? CCE, Ludhiana Appellant Vs. M/s Nandan Auto Tech Ltd. Respondent
Appearance:
Appeared for the Appellant Shri R.K. Gupta, SDR
Appeared for the Respondent - Shri Kamaljeet Singh, Advocate
Coram: Honble Mr. M. Veeraiyan, Member (Technical)
Order No.___________________________
Per M. Veeraiyan :
This is an appeal by the department against the order of the Commissioner (Appeals) No.253/CE/CHD/2006 dated. 31.3.2006.
2. Heard both sides.
3. The relevant facts in brief are that the officers of DGCEI visited the factory premises of the respondents on 23.8.2003 and found stocks of scrap/raw material and finished goods which are as follows :_ Description of goods Quantity (Tons) Value (Rs.) Scrap 6.00 48,000 Raw Material 115.00 18,41,600 Forging Machined - -
Forging reworking 15.46 `7,73,000 Forging 48.45 31,49,250 Total 58,11,850
4. Shri Rakesh Vashisht, Supervisor submitted that were not having the records relating to stock of finished goods and raw materials and that Shri Manjit Singh, his authorised signatory who only can explain was not available. Summons dated 12 9.03, 30.10.03, 7.11.03, 17.12,03 and 30.12.03 were issued to Shri Manjit Singh. He appeared on 4.11.2003 but did not bring any records such as RG-I, balance sheet relating to purchase of raw material or production of finished goods. Original authority in pursuance of the show-cause notice dated 20th February 2004 confiscated inputs/finished goods valued of Rs.58,11,850/- for which records were not maintained but allowed the same to be redeemed on payment of fine of Rs.5.00 lakhs. He also imposed penalty of Rs.9,29,896/- under Rule 25 of the Central Excise Rules read with Section 11AC of the Central Excise Act. The party filed appeal before Commissioner (Appeals) who has set aside the order of the original authority. He held that the respondents produced adequate evidence before the adjudicating authority to prove that the stock as per sale and purchase documents worked out to be the same as verified by the officers on 23.8.2003. He also held that there is no reason to conclude that the stock found on 23.8.2003 was intended for removal without payment of duty.
5. Ld. SDR submits that the respondents have not maintained RG-I records and produced the same to the officers who visited the premises on 23.8.2003. The submissions that the officers of DGCEI took away records without any proper inventory is not correct as the documents were seized in the presence of independent witnesses and in the presence of officials of the company. He also draws attention that while claiming RG-I registers have been taken away from DGCEI officers, they produced copies of RG-I, RG 23A Part-I, Part-I in their reply to the show cause notice which has been clearly recorded in the order-in-original. This is a contradiction. He submits that irregular maintenance of records/non-maintenance of records about receipt and issue of raw materials and manufacture and clearance of finished goods is clearly established and, therefore, the order of the Commissioner (Appeals) should be set aside and the order of the original authority restored.
6. Ld. Advocate for the respondent submits that they have filed necessary returns relating for the month ending 31.7.2003. They also produced photo copies of documents such as RG-I register, RG-23A Part-I before the original authority and, therefore, they have properly accounted for the goods found on 23.8.2003 and therefore the order of the Commissioner (Appeals) should be upheld.
7. I have carefully considered the submission from both sides and perused the records.
8. On perusal of closing balance as on 31.7.2003 and the stock found as on 23.8.03, it is noticed that while there was scrap of 17.574 MTs as on 31.7.03, on 23.8.03 the stock of said material was only 6 MTs. Similarly, stock of raw material was 48.120 MT as on 31.7.03 and the stock of raw material as on 23.8.03 was 115 tons valued at Rs.18,41,600/-. The forging reworking quantity was 10.400 MT as on 31.7.03 and the same was 15.46 tons as on 23.8.03 and the stock of forging machined was 1291 PCS as on 31.7.03 and quantity found as on 31.7.03 is 48.45 tons valued at Rs.31,49,250/-. The respondents who is registered as a manufacturer is under a strict obligation to maintain raw material accounts on a day-to-day basis indicating the receipt and issue of the same and also maintain, on a day-to-day basis, quantity of final products manufactured and cleared by them. Failure to maintain accounts of goods manufactured and cleared by them clearly attracts the penal provision under Rule 25(1)(b) of the Central Excise Rules, 2002. The case of the respondent is still worse. They have not kept in any of there records in their factory on the date of visit of the officers. The claim that some records were taken away by the officers of DGCEI without proper inventory is clearly not substantiated. It is on record that the goods have been seized and the records have been seized as per enclosures attached to panchnama and every page of the panchnama including enclosures stands signed by the independent witnesses. Further, surprisingly, I find that the appellants who claimed that the RG-I has been taken away by DGCEI have produced copies of RG-I register along with reply to the show-cause notice. From the above, it is clear that the respondents have clearly failed in maintaining the proper records relating to the raw materials received by them and issued by them as well as records of finished goods manufactured by them and cleared by them at least for the period 1.8.2003 to 23.8.2003 i.e. till date of the visit of the officers. Under these circumstances, the goods seized were liable for confiscation. Therefore, the order of the Commissioner (Appeals) in setting aside the confiscation cannot be allowed to survive and the same is set aside. For irregular maintenance of records, the respondents are also liable to penalty.
9. However, as submitted by the ld. Advocate, the original authority has clearly erred in presuming that the said unaccounted goods were meant for removal without payment of duty. It is not disputed that the seized goods included not only finished goods but also raw materials and in process materials. There is also no evidence relied upon regarding any clandestine removal by the party during the period prior to 23.8.03. Therefore, such a presumption is not warranted and the provisions of Section 11AC is not attracted.
10. In the light of the above, the appeal is disposed of as follows :-
(a) Order of the Commissioner (Appeals) is set aside and order of the original authority is restored.
(b) While restoring the order of the original authority, redemption fine imposed is reduced from Rs. 5.00 lakhs to Rs.2.5 lakhs.
(c) While restoring the order of the original authority, penalty imposed is reduced from Rs.9,29,896/- to Rs. 2.5 lakhs.
(Dictated & pronounced in open Court) (M. VEERAIYAN) MEMBER (TECHNICAL) RM