Customs, Excise and Gold Tribunal - Delhi
Sargodha Enterprises vs Commissioner Of Central Excise on 8 April, 2004
Equivalent citations: 2004(167)ELT519(TRI-DEL)
ORDER P.S. Bajaj, Member (J)
1. This appeal has been filed by the appellants against the impugned order-in-appeal vide which the Commissioner (Appeals) has affirmed the order-in-original regarding confirmation of duty, confiscation of the goods and imposition of the penalty on the appellants.
2. The learned Counsel has contended that no proper verification of the raw material lying in the factory of the appellants was carried out by the Central Excise officers. They only examined the raw material lying in the factory and did not verify about the material which was in the process of manufacture. He has also contended that in a case of alleged shortage of the raw material, no duty could be confirmed in the absence of any allegations regarding the clandestine removal of the raw material as such or of the finished goods produced from that raw material.
3. On the other hand, the learned JDR has reiterated the correctness of the impugned order. He has argued that since Modvat credit was availed by the appellants on the raw material found short, duty had been rightly confirmed by the adjudicating authority.
4. I have heard both the sides and gone through the record. The perusal of the record including the panchnama prepared at the spot shows that the Central Excise Officers visited the factory premises of the appellants on 1-6-99 and they took note of the finished goods lying in the factory as well as of the raw material which was stored in bags. There is nothing on the record to suggest if any enquiry was made by them about the raw materials in the process. Besides this, no allegations regarding removal of the raw material as such in a clandestine manner or of the finished goods manufactured out of that raw material, had been levelled in the show cause notice against the appellants. The statement of Shri Deepak Maini, partner of the firm, could not provide any conclusive proof regarding the removal of the raw material by the appellants in a clandestine manner especially when in the show cause notice, it has not been so alleged. The Department cannot be permitted to travel beyond the allegations made in the show cause notice and to now allege that there was clandestine removal of the raw material or of the finished goods produced from that raw material, and as such, the appellants are liable to pay the duty. True that the appellants took Modvat credit on the raw material but the reversal of that Modvat credit on the alleged shortage of the goods had not been asked for, from the appellants. Only duty demand has been raised in respect of the alleged short found raw material which in the light of the facts detailed above, could not be raised especially when the very shortage of the raw material (HIP) does not conclusively stand proved, as the raw material in process was never taken into account while working out the alleged shortage. Therefore, confirmation of duty on the alleged shortage of the raw material in the light of the facts and circumstances detailed above, cannot be sustained and the same is set aside.
5. However, the confiscation of the finished goods from the tempo involving duty of Rs. 4,240/- has not been contested before me. The learned Counsel has only contested the imposition of redemption fine by alleging that the same is on the higher side, keeping in view the duty involved on the confiscated goods, the redemption fine, in my view, deserves to be reduced and the same is reduced to Rs. 1,500/-.
6. The perusal of the record also shows that penalty of Rs. 30,000/- has been imposed under Rule 173Q for violation of Rule 9(1), 52A, 173F, 173Q, 226. But none of these rules, in my view, stands attracted to the facts of the present case detailed above. The penalty could be imposed only for the removal of the goods which were seized from the tempo and which involved duty of Rs. 4,240/-. Therefore, the penalty is reduced to Rs. 2,000/-. Similarly, the redemption fine imposed in respect of confiscated tempo from which the goods were seized, is reduced to Rs. 5,000/-.
7. In the light of the discussions made above, the impugned order accordingly stands modified in the above said terms. The appeal stands disposed of accordingly.