AUTOLITE (INDIA) LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants are manufacturers of Automotive lamps. On 22 -11 -1994, officers of Central Excise visited their factory and, upon taking stock of the packed Automotive head lamps in the bonded store room, found that there was a shortage of 12,556 lamps vis -a -vis the recorded balance in the RG 1 register. Shri K.M. Saxena, Authorised Signatory of the company, was present during the course of proceedings on 22 -11 -1994. He acknowledged the correctness of the stock -taking in his statement given to the officers. On 24 -11 -1994, Shri Saxena, in his further statement given to the officers, stated that fully manufactured goods were entered in the RG 1 on the next day by 12.30 PM and that packed goods were kept in the finishing room for want of space in the bonded store room (BSR). As soon as space was created in the BSR, the goods from the finishing room were transferred to BSR. Shri Saxena admitted that only the goods in packed condition were entered in the RG 1. On the basis of the statements of the authorized signatory and of the results of the stock taking, the Department framed a case of clandestine removal of goods, against the company and, by show -cause notice, proposed to recover from them Central Excise duty amounting to Rs. 2,58,173/ - on the above quantity of goods and to impose penalties on them under Section 11AC of the Central Excise Act and Rule 173Q and other Rules of the Central Excise Rules 1944. The show cause notice also proposed imposition of penalty on Shri K.M. Saxena under Rule 209A of the Central Excise Rules, 1944. The proposals were contested. The Adjudicating Authority confirmed the above demand of duty against the appellants and imposed on them penalties of Rs. 2,58,173/ - and Rs. 50,000/ - under Section 11AC and Rule 173Q respectively. That authority also imposed a penalty on Shri K.M. Saxena under Rule 209A.

(2.) IN appeals preferred by the aggrieved parties against the decision of the original authority, the Commissioner (Appeals) set aside the penalty imposed under Section 11AC on the company as well as the penalty under Rule 209A imposed on Shri Saxena and upheld the rest of the order of the lower authority. In the present appeal, Autolite (India) Ltd. are aggrieved by the demand of duty and the penalty of Rs. 50,000/ -.

(3.) EXAMINED the records and heard both the sides. The learned Counsel for the appellants submits that the shortage of goods had been explained to the original authority by the appellants in their reply to the show cause notice. According to their explanation, those automotive head lamps which were kept in loose condition on the floor of the factory and were meant for export were not accounted by the officers at the time of stocktaking. Such goods would never have been cleared for home consumption and, therefore, the difference in stock could not have necessarily given rise to an inference that the goods found short had been clandestinely removed for home consumption. The learned Counsel submits that the allegation of clandestine removal requires positive evidence for confirmation of duty and imposition of penalty. He also submits that the penalty of Rs. 50,000/ - imposed on the appellants under Rule 173Q is high.