COMMISSIONER OF C. EX. Vs. DIAMOND PLYWOOD INDUSTRIES

JUDGEMENT

(1.) In this appeal, the Revenue has questioned the validity of the impugned Order -in -Appeal dated 18 -7 -2002 vide which the Commissioner (Appeals) has modified the order -in -original of the adjudicating authority by setting aside the confiscation of the seized goods and reducing the penalty from Rs. 40,0007 - to Rs. 20,000/ -.

(2.) The facts are not much in dispute. On 28 -3 -2001 while carrying out physical verification of the stock of the plywood/block board, in the factory premises of the respondents, 858.60 sq. mtrs. of goods were found lying in excess of the recorded balance in RG -1. This fact was also admitted even by the them. The adjudicating authority after serving show cause notice on the respondents and after receiving their reply, ordered confiscation of the goods under Rule 173Q and imposed redemption fine of Rs. 20,000/ - for getting the same redeemed and further imposed penalty of Rs. 10,000/ - on the respondents. But the Commissioner (Appeals) has modified the order by setting aside the confiscation of the goods on the ground that only provisions of Rule 226 were applicable. He has also reduced the penalty as indicated above.

(3.) I have heard both sides and gone through the records. The bare perusal of the impugned order shows that the Commissioner (Appeals) has overlooked the judgment of the Bombay High Court in Kirloskar Brothers v. Union of India - 1988 (34) E.L.T. 30 (Bom.) wherein it has been held that even in the absence of mens rea on the part of the assessee, the excess goods lying in his factory could be confiscated under Rule 173Q in the face of the judgment of the Bombay High Court, the ratio of law laid down in Shanti Vrat and Sons - 1998 (99) E.L.T. 153 (T) = 1997 (23) R.L.T. 428 lying down contrary law, could not be followed by the Commissioner (Appeals). The provisions of Rule 173Q were attracted to case of the respondents as the goods found unaccounted in their factory were excisable goods. In my view, the impugned orders deserves to be set aside and the matter must be sent back to the Commissioner (Appeals) for examining the case afresh in the light of the above said judgment of the Bombay High Court. The Commissioner (Appeals) however, shall also take into consideration the contention of the respondent that they are SSI Unit and as such were not liable to duty on the excess goods, even if those were intended to be removed.