GLORY CHEMICAL LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) The appellants are engaged in the manufacture of Organic Chemicals i.e. Vinyl Sulphone falling under Chapter 29 of the Schedule to Central Excise Tariff Act, 1985. Their factory was visited by the Central Excise Officers on 3.7.97. On physical verification of the stock of the finished goods, the same was found to be short by 13,805 kgs of finished goods, then the recorded balance in RG -I register. On being questioned, Shri Suchit Singh, authorized signatory of the appellants admitted that the said short found goods totally valued at Rs. 16,70,405 involving duty of Rs. 3,00,675 were cleared by them without payment of duty. He did not disclose the name of the buyers on the ground that the goods were disposed of in the open market. He also agreed to pay duty and immediately debited the duty amount from their RG -23A Part -II register. His statement was also recorded subsequently, wherein the admitted the correctness of the first statement recorded on 3.7.97. Summons was also issued to the Director, Shri Vimal Jain, but he did not appear before the authorities.

(2.) In view of the foregoing facts, show cause notice dated 18.1.2000 was issued to the appellants proposing confirmation of the debit entry in their RG 23 -A Part -II and for imposition of personal penalty and confiscation of land, building, plant and machinery. The said show cause notice culminated into an order passed by the Additional Commissioner confirming the demand of duty as proposed and imposing personal penalty of Rs. 3.00 lakhs upon the appellants under the provisions of Rule 173Q(1) of Central Excise Rules, 1944 read with Section 11AC of Central Excise Act, 1944. Land, building, plant and machinery was also confiscated with an option to the appellants to redeem the same on payment of redemption fine of Rs. 25,000. The appeal against the order did not succeed before the Commissioner (Appeals). Hence, the present appeal.

(3.) Shri Hardik Modh, Ld. advocate appearing for the appellant submits that there is no evidence corroborating the charge of clandestine removal. He has also submitted that the order Directors of the company were not called upon to offer explanation for the alleged shortages, in which case the demand should be held as based upon presumption and assumption without any evidence. He also submits that in any case and in any view of the matter, the entire realization has to treated as cum duty and the benefit of duty element should be extended to them in terms of the Hon'ble Supreme Court's decision in the case of Commissioner of Central Excise, Delhi v. Maruti Udyog Ltd. He also submitted that the entire duty having been deposited before the issuance of the show cause notice, no penalty can be imposed under Section 11AC of the Central Excise Act, 1944 and interest demand under Section 11AB as held by the Larger Bench in the case of Commissioner of Central Excise, Delhi III, Gurgaon v. Machino Montel (I) Ltd., and Madras High Court in the case of Commissioner of Central Excise, Madras v. Jkon Engineering (P) Ltd., 2005 (67) RLT 157 (Mad.).