Customs, Excise and Gold Tribunal - Mumbai
United Phosphorus Limited, Hasmukhbai ... vs Commissioner Of Central Excise & ... on 23 March, 2001
Equivalent citations: 2001(133)ELT691(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. The appeals are taken up for disposal after waiving deposit with consent of both sides.
2. We have heard both sides.
3. Penalty imposed on United Phosphorus Pvt. Ltd., the manufacturer under Rule 173Q, and penalties imposed on its three employees Hasmukhbhai Desai, Senior Executive, Kanubhai Desai, General Manager and Arun Ashar, Finance Director under Rule 209A are questioned in these appeals.
4. The penalties have been imposed for two reasons - firstly, that the manufacturer took modvat credit of the duty paid on a consignment of inputs, the particulars of which were not entered in Part-I, RG23-A register. Part I is an account relating to quantity of goods and Part II relates to the duty taken as credit. The Commissioner does not dispute that the entry was made in Part II. He accepts the availability of credit although the show cause notice disputes this. he still finds that penalty is imposable and the goods liable to confiscation.
5. While the departmental representative attempts to support the validity of this party of the order, we are unable to uphold it. Once the Commissioner dropped the proceedings instituted to deny the credit taken, he accepts that the credit has been taken rightly. There remains no material on the basis of which he could then impose penalty, except the failure to enter the details of the goods in the R.G. 23A register. The details of the credit duty paid on the goods, available as credit, were entered in the register. We do not think that in these circumstances, penalty was warranted, and set aside penalty imposed on this count.
6. The second reason for imposition of penalty and confiscation of goods is the failure on the part of the appellant to enter for about ten days complete details of its production. This failure is accepted. The explanation that is offered for the lapse is that in the absence of the clerk who was handling this work a substitute was employed, who, not being fully conversant with the work made errors and therefore did not enter the complete details. The penalty has been imposed, and the goods confiscated by resorting to sub-rule (1) of Rule 173Q. No attempt to evade duty is alleged in the notice or found by the Commissioner. In other words, the failure was related to proper maintenance of accounts. In these circumstances, as the counsel for the appellants points out, the provisions of Rule 173Q will not apply. If at all, action can be taken under Rule 226. This is the ratio of the decision of the Tribunal in Bhilai Conductors Pvt. Ltd. CCE 2000 (125) ELT 781. The judgement of the Andhra Pradesh High Court in Southern Steel Vs. UOI 1979 (4) ELT 402, that provisions of Rule 173Q will not apply where the goods have not been removed or there is no attempt to evade duty has been alleged, has been referred to in this decision. In these circumstances, therefore, the correct rule that should have to be applied was Rule 226. Counsel for the appellant does not question the applicability of this rule.
7. Duty payable on the goods in Rs. 30 lakhs. Having regard to the fact that the contravention is purely procedural and there is no allegation of any attempt to evade duty, and considering the explanation tendered we reduce the fine for redemption of the goods from Rs. 47.5 lakhs to Rs. 1 lakh. By applying the provisions of Rule 226, maximum penalty imposable is Rs. 2000/- and we reduce the penalty imposed on the Company to this level.
8. We do not find a case for imposition of penalty on the three employees. None of them was personally concerned with either making entry in the RG-1 register. In the facts of this case we do not find absolutely any basis whatsoever for the confiscation ordered of the plant and machinery. The contravention, as we have noted, was only procedural and intent to evade duty is not alleged. The appellant company, we are told, pays a duty amount of Rs. 100 crores annually, the value of its production being over Rs. 300 crores. It is understandable that in an operation of this size, errors taken place. In dealing with such lapses, punishment should be commensurate with the gravity of the lapse and the notice, or its absence, behind such lapses. We therefore set aside the confiscation of the plant and machinery.
9. Appeal E/3577/2000-Bom allowed in part and all other appeals allowed.