Customs, Excise and Gold Tribunal - Delhi
Meghraj Biscuits India vs Commissioner Of C. Ex. on 20 April, 1999
Equivalent citations: 1999ECR594(TRI.-DELHI), 1999(113)ELT109(TRI-DEL)
ORDER A.C.C. Unni, Member (J)
1. This is an appeal against the order of the Commissioner (Appeals), Ghaziabad, dated 5-6-1997 by which a penalty of Rs. 5,000/- was confirmed against the appellants apart from redemption fine of Rs. 25,000/-.
2. The case against the appellant is that on verification of stock of finished goods in their factory, the officers had found 2464 cartons of biscuits of different varieties in excess of the book-balance and a shortage of 329 cartons of various varieties of biscuits valued at Rs. 48,151 /-. They were issued a show cause notice alleging excesses and shortages of the said quantities of biscuits. They were called upon to show why the unaccounted goods found should not be confiscated and duty should not be demanded on the goods found short. The department relied on panchanama prepared in the presence of Director of appellant company which recorded the finding that physical reconciliation of items resulted in certain quantities of biscuits found in excess/short. The quantity found short was alleged to have been illegaly removed and no explanation relating to the excess stock had been found convincing.
3. Shri Rajesh Chibber, Advocate appearing for the appellants submitted that in the absence of a specific mention of the place from which the goods have been seized, the Panchnama itself would be defective. Further, the show cause notice alleged clandestine removal without any basis for such an allegation in the panchnama. Further, ld. Counsel explained that the appellants who were a small scale biscuit manufacturer was following the practice of showing their production in the RG 1 register at two stages i.e. one in loose quantity and another when it is in packed condition. Since the unit packings of various varieties of biscuits vary, the actual production is recorded when it is in loose condition and put in trays before they are packed in unit packings and thereafter, in cartons. The department had assumed that the loose quantity of biscuits would relate to a certain quantity of cartons and on that basis they had worked out the duty demand as well as the alleged removal. He also draws attention to the fact that Commissioner (Appeals) had reduced the quantum of redemption fine as well as the penalty by about 50%. However, he has not recorded any reason for reducing the amount of redemption fine or penalty. He submitted that once the Commissioner (Appeals') holds that the redemption fine and the penalty had to be reduced, it necessarily followed that there was no mala fide intention on the part of the appellant and in view of this, the impugned order was contradictory in nature.
4. Ld. Counsel also submitted that lower authorities had not given any finding regarding any mens rea on the part of the appellant to justify the imposition of penalty nor had any material been brought on record to show clandestine removal. Ld. Counsel therefore, pleaded for setting aside of the impugned order.
5. Ld. JDR reiterated the findings in the impugned order and the position taken by the authorities below.
6. I have considered the submissions. I am in agreement with the ld. Counsel that the authorities below have not given any finding as to a deliberate intention on the part of the appellant to evade duty or to attempt any clandestine removal. No such allegation has been made in the show cause notice nor has any finding been recorded in the orders passed by the authorities below. As regards the basis for making the inference that there was excess production unaccounted for in the RG 1 register and therefore, an attempt was being made to clandestine removal, I find on perusal of the copy of the RG 1 register which has been filed by the appellants and from column 3 of the Daily Stock Account for the months of April to September, 1994 that the appellants are showing the quantity of biscuits manufactured invariably in loose condition. The entry under the column 'packed' is invariably nil. Further, the quantity shown as finished product under column 15 also invariably tallies with quantity shown as manufactured in the column 3. This, the ld. counsel had explained, would show that the Department had gone on the assumption that the entire production can be worked out carton-wise without reference to any other norms such as the different varieties of biscuits or their unit packings. This assumption was not justified and such an assumption cannot be the basis for alleging shortages or clandestine removal. I find the above submissions of the ld. Counsel have merit. The worst that can be held against the appellants is that they are not entering the production in the RG 1 register at the appropriate time. The appellant had submitted that as per the practice followed by them, the recording of the production in RG 1 register is usually done a day later and this could be the reason why officers were not able to correctly tally the production figures in the RG 1 register.
7. Taking all the relevant factors into consideration I find that the appellants have given a plausible explanation to the entries in their production and stock registers as well as in the RG 1 register. I find that the allegations against the appellants have not been substantiated and therefore, they are entitled to grant of their prayer, namely, setting aside the impugned order.
8. Accordingly, I set aside the impugned order with consequential relief to the appellants. Appeal allowed.