MEDIA VIDEO LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) This appeal has been filed by the appellants against the impugned order -in -original dated 2 -3 -2001 vide which the Commissioner of Central Excise has confirmed the duty, imposed penalties on them and disallowed Modvat credit of various amounts as detailed therein, to them.

(2.) On receipt of an intelligence that the appellants were manufacturing and clandestinely clearing video cassettes and TV video games and cartridges without payment of duty, Central Excise officers carried out search of their premises and also of their dealers/distributors on 12 -12 -91. On conducting physical stock verification of finished excisable goods and goods in respect of Modvat credit was availed, the same were found in excess or short vis -a -vis recorded balance in the statutory records. The unaccounted goods found were 7281 video cassettes involving Central Excise duty of Rs. 4,28,486.85 and the same were seized. It also revealed that the appellants had clandestinely removed without payment of duty 40,000 video cassettes involving duty of Rs. 23,54,000/ -. It was also found that they had wrongly availed Modvat credit of Rs. 91,924.34 on plastic moulded components and also of Rs. 21,55,428/ - on 130632 Sq mts. of magnetic video tapes as the same were found short and clandestinely removed from the factory premises. The inputs found short in the factory premises of the appellants involved duty of Rs. 3,802.43. The premises of M/s. Usha Electronics, Kolkata, M/s. Media CP, New Delhi, and M/s. Zaveri Agencies and Marketing, Ajmer to whom the goods were cleared by the appellants without payment of duty, were also searched. To these firms goods involving duty of Rs. 49,027.61 and Rs. 5097.73 were found to have been cleared without payment of duty. The statement of Shri Anil Kumar Sanghi, Executive Director of the appellants company was also recorded wherein he did not dispute the excess and shortage of the goods found in the factory. The statement of Praveen Chaudhary, Director of the company was also recorded who also did not dispute the removal of 40,000 unrecorded video cassettes for export to warehouse without following the procedure and without making any entry in the record. Similarly Krishna Kumar Sabharwal, Production Manager of the appellants in his statement also did not dispute the shortage of inputs found in the factory. The statements of other dealers and distributors to whom the goods were cleared by the appellants without payment of duty, were also recorded. On completion of investigations, the appellants and some other noticees detailed in the show cause notice (who are not appellants before us) were issued show cause notices. On receipt of reply to that notice from the appellants and after hearing them, the adjudicating authority i.e. Commissioner of Central Excise, passed the impugned order.

(3.) We have heard both sides. So far as the confiscation of 7281 video cassettes valued at Rs. 3,64,050/ - involving Central Excise duty of Rs. 4,28,486.85 is concerned, the same has been contested by the Counsel on the ground that these goods though not accounted for, in the statutory record, were still lying in the factory premises and as such no confiscation of the same could be ordered. The Counsel has further contended that only penalty under Rule 226 of the Rules could be imposed and not under Rule 173Q. The redemption fine imposed, according to the Counsel of Rs. 50,000/ -for the redemption of these goods is also exhorbitant and so also the penalty of Rs. 50,000/ -, as under Rule 226, the penalty to the extent of only Rs. 2000/ -could be imposed. The learned Counsel has placed reliance, in support of his contention on the decision of the Tribunal in Bhilai Conductors Ltd. v. C.C.E -2000 (125) E.L.T. 781 wherein it has been observed by the Tribunal that in the absence of any evidence to prove the malafide intention, for non -accountal of the goods, the assessee could only be penalised under Rule 226 and not under Rule 173Q.