DELHI DYING MILLS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) M /s. Delhi Dying Mills have filed this Appeal against Order -in -Appeal No. 560/2002 passed by the Commissioner (Appeals) confirming redemption fine and penalty against them. Shri C. Hari Shankar, learned Advocate, submitted that the Appellants are engaged in processing of fabrics; that the Central Excise Preventive Officers visited their factory premises on 6.9.99 and found 1845 sq.m. of processed cotton fabrics valued at Rs. 48,983 unaccounted in the statutory records; that they also found 20150 linear Mtrs. grey cotton fabrics valued at Rs. 4,97,600 unaccounted in their raw material/lot wise register; that the Deputy Commissioner under Order -in -Original No. 453/2000 dated 31.5.2000, confiscated both the fabrics and imposed consequential redemption fine of Rs. 75,000 besides imposing penalty of Rs. 20,000; that the Commissioner (Appeals), under the impugned Order, has rejected their Appeal relying upon the statement of Shri Rakesh Kalra, partner of the Appellants. He, further, submitted that the seized cotton fabrics was not fully in manufactured condition and as such was not entered in the statutory records; that they were maintaining raw material/lot -wise register which were produced also before the Central Excise officer; that however, the officer did not verify the said register. He, further, submitted that it is well settled that non -accountal of finished goods in the RG I register does not ipso facto render them liable for confiscation. He relied upon the decision in the case of Lakshmi Polypacks Pvt. Ltd. v. CCE, Hyderabad -I, 2003 (86) ECC 631 (T) : 2003 (56) RLT 64 (CEGAT -Ban). Finally, he submitted that both redemption fine and penalty imposed are on very high side considering the fact that the duty involved is only Rs. 6000.

(2.) COUNTERING the argument Shri S. Bhatnagar, learned Departmental Representative submitted that the Central Excise officer had recorded statement of Shri Rakesh Kalra, partner, on the date of their visit itself in which he had admitted the unaccountal of finished/processed cotton fabric as well as of grey cotton fabric and non -maintenance of raw material in lot -wise register; that he has also given the reasons for non -accountal in the statutory records as absence of their Accountant who had not attended the factory for the last three days; that as the goods were not accounted for, these are liable for confiscation under the provisions of Rule 173Q of the Central Excise Rules. He relied upon the decision of the Tribunal in the case of Media Video Ltd. v. CCE, New Delhi, 2003 (55) RLT 407. He also relied upon the decision in the case of Kirloskar Brothers v. Union of India, 1988 (34) ELT 30 (Bom.) wherein the Bombay High Court has held that for imposition of penalty and fine, establishing of mens rea is not necessary; that the Bombay High Court has held "Clauses (a), (b) and (c) of Sub -rule (1) of Rule 173Q do not admittedly use the expression 'with intent to payment of duty' which is found in Clause (d) thereafter. It, can, therefore, be prima facie assumed that the liability in terms of Rule 173Q(1) Sub -clauses (a), (b) and (c) does not depend upon mens rea".

(3.) WE have considered the submissions of both the sides. It is specifically mentioned in Panchnama recorded on 6.9.99 that RG I register was maintained upto August 1999 and the Appellants were not maintaining lot -wise register. It is, further, mentioned in the Panchnama that the processed fabrics and grey cotton fabric which was not accounted for, were seized by the Central Excise officer for further action, The Appellants have neither challenged the Panchnama nor brought any evidence on record to show that the statements given by their partner Shri Rakesh Kalra was retracted. They have also not brought any material in support of their contention that the fabrics was not fully processed and was under the process of finishing. In view of this, there is no force in the submissions that the fabrics/goods were not fully processed or they were maintaining lot -wise register. Rule 173Q(1) of Central Excise Rules, 1944 clearly provides for confiscation and imposition of penalty if any manufacturer does not account for any excisable goods produced or stored by him. The absence of mens rea, in view of the judgment of the Bombay High Court in Kirloskar Brothers Ltd. will not affect the confiscation of the unaccounted goods and imposition of penalty on them. Similar views have been expressed by the Supreme Court in the case of Zunjarrao Bhikaji Nagarkar v. Union of India, 1999 (66) ECC 40 (SC) : 1999 (112) ELT 772. The Supreme Court has held that under Rule 173 Q, both things are necessary: (1) goods are liable to confiscation (2) person concerned is liable to penalty. Accordingly, I uphold the confiscation of goods and consequently redemption fine and imposition of penalty on the Appellants. However, taking into consideration all the facts and circumstances of the case and the duty involved, I agree with the learned Advocate that both redemption fine and penalty are on the higher side. The interest of justice will be met by reducing the penalty to Rs. 5,000 and redemption fine to Rs. 10,000. I order accordingly.