Custom, Excise & Service Tax Tribunal
Cce, Delhi vs (1) Ganpati Rolling P.Ltd on 1 March, 2012
CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL,
West Block No. 2, R.K. Puram, NEW DELHI
COURT No. III
Excise Appeal No.1388-1389 of 2006
Date of Hearing : 01.03.2012.
[Arising out of Order-In-Appeal No.172/DK/ST/JPR-I/2010, dated 20.04.2010 issued by CCE, Jaipur]
For approval and signature:
Honble Ms. Archana Wadhwa, Judicial Member
Honble Mr. Mathew John, Technical Member
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, Delhi Appellants
Versus
(1) Ganpati Rolling P.Ltd.
(2) Shri Manoj Kumar Jain Respondent
Coram:
Honble Ms. Archana Wadhwa, Judicial Member Honble Mr. Mathew John, Technical Member Present for the Appellant Shri Bharat Bhushan, AR Present for Respondent Shri K.K.Anand, Adv. Order No._______________ Dated :___________ Per Ms. Archana Wadhwa:
Being aggrieved with the order passed by Commissioner (Appeals), Revenue has filed the present appeal. We have heard Shri Bharat Bhushan, ld. AR appearing for the Revenue and Shri K.K.Anand, ld. Advocate appearing for the respondents.
2. M/s Ganpati Rolling P.Ltd. are engaged in the manufacture of copper wire rods falling under Chapter 7408 of the Central Excise Tariff Act, 1985. Shri Manoj Kumar Jain is Director of the said manufacturing unit.
3. The premises of M/s Ganpati Rolling P.Ltd. were put to search by the officers of DGCEI on 22.02.04. On verification of the stock, it was found that the raw materials and the finished goods were in excess of the quantity recorded in the statutory records. The same were accordingly put under seizure by way of a Panchnama dtd. 22.02.04.
4. Statement of Shri Lalji Dubey, Manager was recorded on the same date wherein he deposed that the records maintained by them in the shape of raw materials stocks register, PLA Cenvat register are not available in the factory. The respondent produced the said records subsequently for the provisional release of the goods after completing the records. Statement of the respondents accountant Shri Raghunandan Aggarwal was recorded wherein he deposed that he is a part-time accountant of the unit and does not write the books of accounts regularly. The same are completed as and when he visits the factory. He accepted that the entries in RG-1 register were made subsequent to the seizure. Statement of Shri Manoj Kumar Jain, Director of the manufacturing unit was also recorded accepting the fact that it is Shri Lalji Dubey who is Manager and authorised signatory and looks after day-to-day activities.
5. On the above facts, proceedings were initiated against the respondent by way of issuance of Show Cause Notice dtd. 18.08.04 proposing confiscation of the seized goods, excess found raw material as also excess found goods totally valued at Rs.93 lakhs approximately and proposing imposition of penalties on the manufacturing unit as also on the Director. The said SCN culminated into an order passed by Joint Commissioner confiscating the goods with an option to the respondent to redeem the same on payment of redemption fine of Rs.25 lakhs. In addition, he also imposed penalty under Rule 25 of Central Excise Rules, 2002 and Rs.25,000/- on Shri Manoj Kumar Jain, Director.
6. The said order was appealed against by the respondents before Commissioner(Appeals) who by taking note of various decisions of the Tribunal as also of the provisions of Rule 25, set aside the confiscation of goods and imposition of penalty on the ground that there is no mensrea on the pat of the respondent and mere non-entry in RG-1 register cannot be adopted as a ground for confiscation and penalty.
Hence, the present appeal by the Revenue.
7. After appreciating the submissions made by both sides and after going through the impugned order, we find that there is no dispute on the factual position. Admittedly the raw material as also the finished product was found to be in excess, as not recorded in the statutory documents.
As regards, the raw material, the appellate authority has relied upon various precedent decisions of the Tribunal holding that requirement of accountal of goods under Rule 25 of Central Excise Rules applies to the final excisable goods and the raw material is not liable to confiscation on the ground of non-entry in the statutory records. The appellate authority relied upon the Tribunals decision in the case of Oceanic Cooling Towers P.Ltd. reported in 2003(161)ELT631(Tri.) as also in the case of Saboo Berlac Ltd. reported in 2004(177)ELT1114(Tri.). To the similar effect is the decision of the Tribunal in the case of Dincotex P.Ltd. reported 1999(107)ELT326(Tri.).
By following the said decisions, he set aside the confiscation of raw material. We find that the law on the above issue stands settled by various decisions, some of which stands referred to and relied upon in the impugned order of Commissioner (Appeals). Revenue has referred to the Tribunals decision in the case of Patel Products reported in 2003(151)ELT650(Tri.-Del.) wherein duty demand on the raw material found short was upheld against the assessee. We find that the ratio of the above decision is not applicable to the facts of the present case in as much as no duty stands confirmed against the respondents on the case of short found raw material. In fact the allegations are that the raw material was not entered in the statutory records and as such was in excess than the balance reflected in the statutory records.
As such we find no justifiable reasons for confiscation of seized excess found raw material.
8. As regards, the confiscation of the excess found final product, we find that Commissioner(Appeals) has referred to the provisions of Rule 25. Sub-rule (v) of Rule 25 provides for confiscation of the goods if the manufacturer does not account for the excisable goods produced or manufactured or stored by him. The appellate authority by relying upon the Tribunals decision in the case of Pepsi Foods reported in 2002(139)ELT658(Tri.) has held that accounting for goods is different than non-recording in RG 1 register. Erstwhile Rule 173Q means explaining correct position of excisable goods as per law and non-accountal would relate to not making correct entries in accounts books. By observing that there is no finding of any mensrea against the assessee so as to invoke sub-rule (d) of Rule 25 which relates to contravention of any of the provisions with an intent to evade payment of duty, he has held that confiscation of the excess found goods was also not called for. Ld. Appellate authority has also relied upon Larger Benchs decision in the case of Bhilai Conductors P.Ltd. reported in 2000(125)ELT781(Tri.-LB) laying down that mere non-accountal of goods in RG-1 register, when there is no evidence that non-accountal was meant for removal from the factory without payment of duty, cannot be the made basis for confiscation of the goods. The appellate authority also observed that Rule 173(Q) being a penal provision, intention is in-built in it and hence mensrea is essential ingredient to attract this clause which has to be read with conjunction and not in isolation with the other sub-rules of the said provisions. Accordingly, Commissioner(Appeals) has held that mere non-presence of records/non-entry is not sufficient to constitute a reasonable belief that the goods were meant for clandestine removal without payment of duty in the absence of any evidence to the contrary.
9. We note that the statutory records were not available in the factory premises at the time of visit of the officers. The same were produced on the next day after making the entries. As such the question required to be decided is as to whether such non-entry in RG 1 will attract their confiscation or not?
10. As rightly contested by ld. Advocate for the respondents, confiscation is attracted in terms of Rule 25(b) or (d). Rule 25(b) covers a situation where a manufacturer does not account for the excisable goods manufactured by him. The question is as to how the said expression does not account for has to be interpreted. Mere non-entry in RG 1 records will suffice for holding that the goods have not been accounted for by the manufacturer. After all such huge production requires equally huge consumption of raw materials. There would be production slips or other documentary evidences at the intermediate stage. There is nothing on record to show that the said raw material, out of which final products stands manufactured by the respondent, were not reflected in the records neither is there any allegation to that effect. If the same were reflected in the raw material records, it cannot be held that the finally manufactured goods were not accounted for by the respondent. If the said goods are part of the regularly manufactured goods by the respondents, the mere fact of their non-entry in RG 1 would not call for their confiscation. The Tribunals decision in the case of Bhilai Conductors P.Ltd. referred (supra) makes it very clear that there need to be a malafide intention on the part of the manufacturer to clear the goods clandestinely. Such malafide intention has to be arrived at from the evidences collected by the Revenue. The mere fact of non-entry which can be on account of so many reasons, cannot be said to be an evidence reflecting upon the malafide intention of the assessee. No doubt the records are required to be maintained upto date and in the present case, the accountant of the manufacturing unit has clarified that he was not attending the factory regularly and was not making entries in the records regularly. However, such fact by itself, i.e., making of delayed entries in RG 1 register, cannot be adopted as ground for confiscation of goods or imposition of penalties on respondents.
11. In view of our fore going discussions, we find no justifiable reasons for interfering in the impugned orders. Revenues appeal is accordingly, rejected.
(Pronounced in the open court on ____________) (Archana Wadhwa) Judicial Member (Mathew John) Technical Member RK-I ??
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