COMMISSIONER OF CENTRAL EXCISE Vs. JAIN INDUSTRIES

JUDGEMENT

(1.) In this appeal, the Revenue has questioned the validity of the impugned order -in -appeal dated 20.9.2002 vide which the Commissioner (Appeals) had modified the order -in -original of the Assistant Commissioner, by setting aside the confiscation of the goods un -accounted for and also reduced the penalty from Rs. 30,000 to Rs. 2,000 by following the Tribunal's decision in Bhilai Conductors P. Ltd. v. Commissioner of Central Excise, Raipur, 2000 (69) ECC 192 (T) : 2000 (125) ELT 781.

(2.) The respondents are engaged in the manufacture of processed cotton fabrics, etc. On 25.2.98, the officers of the Central Excise visited their factory premises at Gurgaon and carried out physical verification of the stock. The officers found that textile measuring 6202 mtrs. Involving Central Excise duty of Rs. 74,082 was not recorded in the RG -1 register. This textile related to the packing list prepared on the dates from 22.2.98 to 24.2.98. The excess textile was seized in the presence of Anil Kumar Jain and two independent witnesses under a panchnama prepared at the spot. The statement of Raj Kumar Gupta, Excise Assistant of the respondents company was recorded. Thereafter, statement of Anil Jain, Partner of the respondents company was also recorded. On completion of the investigation, show cause notice was served on the respondents proposing confiscation of the seized goods and imposition of penalties under Rules 173Q and 226 of the Central Excise Rules. In reply to that show cause notice, the respondents pleaded that their unit was working in 3 shifts and goods in the RG -1 register were entered after the approval of the shade, quality, etc., by the buyers. They also alleged that as per the practice, units working in three shifts, could account for goods in RG -1 register before the completion of the first shift of the next day. Such units could account for the goods in two stages i.e. partly at the end of the day and party after completion of the third shift, i.e the next day. The respondents followed this practice and as such they had no intention to evade Central Excise duty. The adjudicating authority, however, did not accept this version of the respondents and ordered the confiscation of the seized goods with option to get the same redeemed on payment of redemption fine of Rs. 75,000. The adjudicating authority also imposed a penalty of Rs. 30,000 under Rule 173Q on the respondents. The Commissioner (Appeals) has set aside the confiscation of the goods by following the ratio of law laid down in Bhilai Conductors P. Ltd. (supra) and reduced the penalty to Rs. 2000 under Rule 226 by observing that Rule 173Q could not be invoked as there was no intention on the part of the respondents to remove the goods without payment of duty.

(3.) I have heard both sides and gone through the record. The perusal of the impugned order of the Commissioner (Appeals) shows that the main plea taken by the respondents before him was that the seized goods were not in a fully finished condition and were lying in the packing area pending approval by the buyers, whereas the explanation offered by Shri Raj Kumar Gupta, authorised signatory of the respondents on the date of the seizure of the goods was that out of the seized goods, 3228 mtrs. of fabrics was production of the previous day which as per the practice could be entered in the RG -1 next day i.e. 25.2.98 and that of the goods of 22nd and 23rd were to be entered in the RG -1 register after approval thereof by the customers. This was also stated by the Anil Jain, Partner of the respondents company, as is evident from the impugned order. But the fact remains, as even recorded by the Commissioner (Appeals) himself in the impugned order, that there was non -accountal of the goods. No cross -objections have been filed by the respondents to contest these findings of the Commissioner (Appeals) and as such the same have to be accepted. The contention of the Counsel that the goods were entered in the Lot Register which was resumed by the officers and that the goods were not entered in the RG -1 as the approval of the buyers was awaited, cannot be accepted. The request of the Counsel that the Lot Register should be summoned and examined by the Bench cannot be entertained at this stage especially when it was never so agitated before the lower authorities. There is no rule or executive instructions requiring the entry of the manufactured goods in the RG -1 only after the approval of the buyers. Rather under the Rules every manufactured goods in whatever condition those might be at that time, are to be entered in the RG -1 and in that register a note could be given by the assessee about the condition of the goods, etc. But the goods cannot be allowed to be kept in the packing area or in the premises of the factory by the assessee till they are approved by the buyers. Under any provision of law. Therefore, from the material on record including the statement of the authorised signatory and the partner of the respondents, company referred to above, in my view it stands proved there was non -accountal of the goods.