R.M.I. STEEL Vs. CCE, MEERUT

JUDGEMENT

(1.) THE appellants are manufactures of Cold Rolled (CR) Steel Strips. Central Excise Officers conducted a physical verification of the stock of finished goods and raw materials in the appellants factory form 6.4.96 (door) to 7.4.96 (4am) and detected an excess quantity of 50.995 MTs of CR Steel Strips (finished product) and an excess quantity of 232.374 Mts of Hot rolled (H.R.) Steel Coils (raw material) vis -a -vis the recorded balances in their RG -1 Register and RG23A Part -I Register respectively. The goods found in excess wee seized by the officers. Statement of one Sh. R.K. Sood, Manager (Accounts) and one Sh. K.K. Verma, Jr. Officer (Despatch) were recorded under Section 14 of the Central Excise Act. The officers also resumed the above registers as well as the production records which were being maintained by the party. Later on, by letters dated 10.4.96 and 16.4.96, the appellants explained to the Assistant Commissioner as to how the above quantities of the finished goods and raw materials happened to be found. Subsequently, show cause notice dated 4.10.96 was issued to the party by the jurisdictional Addl. Commissioner proposing to confiscate the seized goods and impose penalty on the appellants. The party contested the notice by submitting, interalia that the excesses of both finished goods and raw materials had already been reconciled by them with reference to the records already resumed by the officers, by way of the clarificatory letters dated 10.4.96 and 16.4.96. It was also stated by them that, as early as on 6.4.96, Sh. K.K. Verma had in his statement recorded by the officers, explained the excesses. The Deputy Commissioner, to whom the adjudicatory jurisdiction stood transferred in the mean time adjudicated the dispute after hearing the party and passed an order of confiscation of the seized goods and imposition of penalty of the party. Subsequently, the matter was taken in appeal before the Commissioner (Appeals) and the latter upheld the order of the Deputy Commissioner. Hence the present appeal.

(2.) I have carefully examined the records of the case and have heard both sides.

(3.) LD . C.A., Sh. P.R. Mullick for the appellants submits that the show -cause notice itself was issued without submits that the show -cause notice itself was issued without proper consideration of all the materials placed before the Additional Commissioner by the applicants. The letters dated 10.4.96 and 16.4.96 submitted by the party to the Department were clarificatory to the factual position already disclosed by the appellants' records resumed by the officers from their premises on 6/7 April, 1996. The said letters did not purport to make out any new case. yet the adjudicating authority, in its order, held that the submissions made by the appellants subsequent to departmental proceedings of 6/7 April, 1996 were an afterthought. Ld. C.A. submits that this finding of the Dy. Commissioner resulted form non -application of mind to the correct factual position. According to him, if the adjudicating authority had applied its mind to the statement of Sh. K.K. Verma and the subsequent letters dated 10.4.96 and 16.4.96 sent by Sh. R.K. Sood, it would have been satisfied that the excesses of finished goods and raw materials were not attributable to any non -accountal. He further submits that the lower appellate authority also fell into a similar error by observing that the appellants had failed to pin point that 37.855 MTs out of the excess found of C.R. Coils was the previous shift's production. As a matter of fact, the appellants had pinpointed the same through the statement recorded by the officers on 6.4.96 and the subsequent letters submitted by them to the Department, well before the issuance of the show -cause notice. Ld. C.A. further submits that the raw materials were not at all liable to be confiscated and he has cited case law in support of this submission. He also submits that there was nothing on record to show that the finished goods found in excess were kept in the factory for clandestine removal and, in such circumstances, the goods wee not liable to be confiscated. Decisions were cited in support of this submission as well. He has also challenged the imposition of penalty, drawing support from case law.