PNP CASTINGS (P) LTD. Vs. CCE

JUDGEMENT

(1.) THE appellant challenges the order of the Commissioner (Appeals) dated 30.8.2004, dismissing its appeal and upholding the order of the Joint Commissioner, Central Excise, Lucknow, made no 30.5.2003 confiscating the seized goods under Rule 25 of the Central Excise Rules, 2001, giving option to the appellant to redeem them on payment of redemption fine of Rs. 1,50,000/ - and imposing a penalty of Rs. 29,623/ - under Rule 25 read with Section 11 AC of the Central Excise Act, 1944.

(2.) THE appellant was engaged in the manufacture of CI Castings falling under sub -heading 7325.10 of the Schedule to the Tariff Act. A team of the Central Excise Officers visited the manufacturing premises of the appellant on 30.8.2001 and on physical verification of the records, they found stock in excess and unaccounted for in daily stock register, as noted down in the panchnama, which was prepared on the spot. The verification was done in the presence of the Production Manager and authorized signatory of the appellant. It was found that the production/heat register of the party was written only up to 26.8.2001. There was no entry in the production/heat register regarding pouring of any material in the furnace on 28.8.2001. The authorized signatory tried to make entries in that register to show pouring of material in respect of 28.8.2001. The officers resisted his attempt. The officers also found a stock of casting of 530 gear boxes in respect of which there was no record either in the daily stock register (RG.1), or in raw material account Form IV, or in RG.23A Part I, i.e. input account. When this stock of castings was pointed out by the officers, the authorized signatory had stated that these were rejected castings and got them indicated in the physical stock verification report as inputs. On being asked by the officers about the necessary evidence of its procurement as inputs or raw material, the appellant failed to show that it was not manufactured by it. The Joint Commissioner on the basis of the material on record, held that though sufficient time had elapsed before issuance of show cause notice dated 22.2.2002, the appellant had never submitted the invoice dated 30.8.2001, nor put up the plea that 530 gear boxes were purchased under that invoice. Taking note of the statement of the authorized representative that short blastings took 3 to 4 days after casting, the Joint Commissioner observed that it was not clear how even the material which was issued on 28.8.2001 could be in a final stage in the first half of 30.8.2001 after casting, blasting and grinding. It was held that the seized goods were nothing but, suppressed production and were, therefore, liable for confiscation.

(3.) IN the appeal preferred against the order of the Joint Commissioner, the Appellate Commissioner held that there was no documentary evidence or entry to explain the presence of the gear boxes in the factory on 30.8.2001 and that the explanation which was sought to be put -forth after the show cause notice that the goods were purchased under an invoice dated 30.8.2001, was an afterthought. It was further held that it was apparent from the records and the statement dated 31.8.2001 that there was no entry made in the Production/Heat Register on 28.8.2001 when the melting was claimed to be done. Heat Register/RG 1 were written up after 22.8.2001, nor was any entry made for the finished products claimed to have been manufactured on 26.8.2001. There were also no entries for issue of raw material after 22.8.2001 to substantiate the appellant's claim that the excess found was out of the raw material issued for melting. It was, therefore, held that the adjudicating authority had correctly found that the excess stock was unaccounted production. The learned Counsel appearing for the appellant contended that the goods were not in a finished stage and therefore, they were not entered in the daily stock register on 30.8.2001. He further argued that for attracting Rule 25(b), intention to evade payment of duty was essential and since there was absence of mens rea, no penalty could have been imposed on the appellant under Rule 25 of the said rules. He also submitted that the gear boxes were purchased on 30.8.2001 and relied upon the copy of the invoice No. 70 dated 30.8.2001 issued by J.K. Steels in favour of the appellant.