COMMISSIONER OF C. EX. Vs. MODISON LTD.

JUDGEMENT

(1.) THE issue referred to the Larger Bench is whether there is any need for mens rea for warranting confiscation and penalty under the provisions of Rule 173Q(1)(a), (b) and (c) of the Central Excise Rules, 1944.

(2.) APPEAL No. E/1556/04 The brief facts in this case are that on 22 -2 -2001, officers of Central Excise division, Vapi, visited the premises of the assessee engaged in the manufacture of copper chromium billets, copper rods/flats/bars, cast copper wire bar etc. falling for classification under Chapter 74, and found 299 bundles of extruded and drawn copper bars/rods which were fully tested, packed on 13th, 16th and 21st February, 2001 and in ready to despatch condition, but not entered in the daily stock account which showed nil stock of finished goods. Duty amount involved thereon was Rs. 1,90,338.80. It was also noticed that the assessee had removed duty paid raw materials viz. 17,482 kgs. of copper waste and scrap on which credit was taken, to their sister unit, i.e. Modisun Ltd., without preparing central excise invoice, without reversing Cenvat credit involved and without obtaining specific permission to store duty paid material in some other factory premises. Show case notice dated 17 -8 -2001 was, therefore, issued to the assessees, proposing to confiscate the seized finished goods and raw materials under Rule 173Q(1), to recover Central Excise Duty/Cenvat credit of Rs. 2,06,987/ - leviable on raw materials cleared illicitly without payment of duty/without reversing Cenvat credit proposing levy of interest under the provisions of Section 11AB read with Rule 57AH and imposition of penalty under Section 11AC of the Central Excise Act read with Rule 173Q of the Rules. The Additional Commissioner of Central Excise adjudicated the notice by ordering confiscation of seized finished goods with option to redeem the same on payment of a fine of Rs. 2,00,000/ -, ordered confiscation of seized raw materials with option to redeem the same on payment of a fine of Rs. 2,50,000/ -, confirmed the duty demand raised in the notice together with interest imposed penalty of amount equal to duty involved on the seized finished goods and seized raw materials and penalty of Rs. 20,000/ - on the senior engineer -cum -authorised signatory of the assessee, under Rule 209A. The Commissioner (Appeals) set aside the order of confiscation, holding that there was no evidence on record to establish intention on the part of the assessees to clear finished goods clandestinely and that since raw material found short was subsequently recovered at an adjoining plot of the assessee which prior to 1996 was registered with the central excise authorities as unit No. 2 of the same assessee and the assessee had surrendered its registration in 1996 and in February 2001, the assessee submitted a revised ground plan for addition of premises of the plot where the raw materials were found, the bona fide intention of the assessee was established and, therefore, the short found quantity of raw material was not removed by the assessee from their control. He reduced the penalties to Rs. 2,000/ - under Rule 173Q and set aside the penalty imposed on the authorised signatory of the assessee company. The Revenue has come up in appeal against the setting aside the confiscation and the reduction of penalty.

(3.) APPEAL No. E/1558/04 The brief facts are that on 19 -5 -2000, Central Excise Officers visited the premises of the manufacturing unit of the assessees and seized excess/unaccounted stock of finished goods, viz. air -conditioners, electric motors and fan blowers/impellers. Show cause notice dated 13 -11 -2000 issued to the assessees for recovery of duty, confiscation and penalty on the manufacturing unit and its director, was adjudicated by the Deputy Commissioner who confirmed a demand of Rs. 28,882/ -, imposed penalty of equal amount on the company and on its director and confiscated the seized goods. The Commissioner (Appeals) held that there was nothing on record to bring out that the assessees made any attempt to remove goods in question clandestinely with intent to evade payment of duty. He, therefore, set aside the confiscation. He reduced the penalty imposed upon the company to Rs. 2,000/ - and set aside the penalty on the director. The Revenue is in appeal against setting aside of confiscation and reduction of penalty.