OSWAL SUGARS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE applicants pray for waiver of pre -deposit and stay of recovery in respect of an amount of penalty of Rs. 1 lakh.

(2.) EXAMINED the records and heard both the sides. Officers of Central Excise visited the applicants' factory in December, 1997 and found, on stock verification, an excess of 203 bags of sugar vis -a -vis RG 1 recorded balance, and they seized the goods. The Department by show cause notice proposed to confiscate the goods and impose penalty on the party under Rule 173Q of the Central Excise Rules, 1944. The proposal was contested. The original authority ordered confiscation of the goods with option to the party to redeem the same on payment of a fine of Rs. 1 lakh. It also imposed a personal penalty of Rs. 2 lakhs on them. In the appeal preferred by them against the order of the original authority, the Commissioner (Appeals) upheld the lower authority's decision on merits but reduced the quantum of fine and penalty to Rs. 50,000 and Rs. 1 lakh respectively. The learned Counsel for the appellants submits that their case falls under Clause (d) of Rule 173Q(1) which requires mens rea for imposition of penalty. Neither the show cause notice nor any of the authorities below has attributed any mens rea to the applicants in their omission to account for the above goods in the RG 1. Hence the penalty imposed on them requires to be set aside. The order of confiscation is also challenged on the same ground. The learned Counsel relies on the decision of the Tribunal in Bhillai Conductors Pvt. Ltd. v. CCE, Raipur reported in 2000 (125) E.L.T. 781.

(3.) THE learned DR, on the other hand, submits that non -accountal of excisable goods in RG 1 register amounts to contravention of Rule 53 of the Central Excise Rules, 1944 attracting a penalty not less than Rs. 5,000/ - and not more than three times the value of the goods in terms of Clause (b) of Rule 173Q(1). The learned DR relies on the decision of the Bombay High Court in Kirloskar Bros. v. UOI reported in 1988 (34) E.L.T. 30 (Bom.) = 2002 (83) ECC 497. He submits that, in the instant case, the value of the goods was Rs. 2.8 lakhs and, therefore, the penalty of Rs. 1 lakh could by no means be considered to be unreasonable.