UNIWORTH TEXTILES LTD. Vs. CCE

JUDGEMENT

(1.) THIS appeal is directed against the order -in -appeal dated 22.06.2004, which upheld the order -in -original vide which confiscation was ordered and penalty was imposed on the appellant.

(2.) THE relevant facts that arise for consideration are, appellant is a 100% EOU and procures inputs for the manufacture of final products under notification No. 13/81 -Cus dated 9.2.1981 as amended from time to time. Officers of the Central Excise HQ, Raipur visited the factory premises of the appellant and on physical stock verification found an excess quantity of input Polywool Yarn and seized the same. A show cause notice was issue to the appellant proposing confiscation of the said seized yarn and also for imposition of penalty. Appellant resisted the show cause notice on the ground that they being a100% EOU were under the physical control of the Customs officers and hence there cannot be any movement of the inputs or finished goods from or to their factory without being in knowledge of the department, that the excess input was due to the fact that though the inputs were issued to the production department, the same was not lifted due to space shortage. The adjudicating authority did not accept the contentions and ordered for confiscation of the goods under Section 111(o) of the Customs Act, 1962, with an option to redeem the same on payment of redemption and imposed penalty under Rule 173Q and 226 of the Central Excise Rules, 1944. On an appeal the learned Commissioner (Appeals) concurred with the findings of the adjudicating authority on confiscation but reduced the penalty.

(3.) THE leaned advocate appearing for the appellant submits that the confiscation ordered under Section 111(o) of the Customs Act is not applicable in this case as the said provisions will apply only if there is any violation of the conditions of the exemption notification. It is his submission that the seized inputs were procured by the appellant under notification No. 13/81 -Cus as amended and they have not violated any conditions of the said notification. He relies on the decision of the division bench of the tribunal in the case of DSL Software India Ltd. v. CC, Bangalore as reported at for this submission. It is also his submission that penalty has been imposed on the appellant under Rule 173Q and 226 of the Central Excise Rules, 1944 and are not applicable in this case as the appellant is functioning under Rules 100B of Central Excise Rules, 1944 i.e. under Chapter VA, which is excluded from application of provisions of Chapter VII A which incorporates the penalty provisions under Rule 173Q. On merits it is his submission that the appellant being a 100% EOU is under the physical supervision of a Customs officer round the clock, hence there cannot be any inflow or outflow of material without being recorded. Further it was his submission that the appellant has given a total reconciliation of the inputs received and consumed in their factory, which would indicate that there are no excess inputs received in the appellant's factory.