MODI RUBBER LTD Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) M /s. Modi Rubber Ltd. have filed the appeal being aggrieved with the order dated 1 -9 -1997 passed by the Commissioner (Appeals), Ghaziabad.

(2.) BRIEFLY stated the facts are that the appellants manufacture tyres and avail of Modvat credit of the duty paid on inputs under Rule 57A of the Central Excise Rules. The Central Excise Officers conducted the physical stock taking of the finished goods in their factory premises on 31 -7 -1995. The officers found 570 tyres and 25 tubes less than the balance recorded in RG1 register involving duty amounting to Rs. 90,965/ -. The officers also noticed that the appellants had made entries in their RG 23 Part I register only upto the month of May, 1995. The officers, after checking the receipt, issue and closing balance of the inputs, found shortage in the inputs worth Rs. 12,03,661/ - involving of duty Rs. 2,36,937/ -. Further, it was noticed that they had availed Modvat credit of Rs. 2,01,38,023/ - in respect of which receipt was not shown in RG 23 Part I Register. The appellants had also not submitted the extracts of RG 23 Part I account for the months of June and July, 1995. The Asstt. Commissioner confirmed the demand of duty Rs. 90,965/ - and Rs. 2,36,937/ - and imposed a penalty of Rs. 2,36,937/ - under Rule 57 -I and Rs. 1,00,000/ - under Rules 9(1), 52B, 57G and 173G of the Central Excise Rules, holding that the physical stock taking of the finished goods and raw material was conducted thoroughly in presence of the authorised signatory and independent witnesses, giving sufficient time of 6 -7 hours; that at no time authorised representative had chal -langed the correctness of the stock taking, that when entries in RG 23 Part II and the records were made, there was no justification in not manufacturing RG 23 Part I which is an essential record for day to day monitoring of inventory of raw material. On appeal, the Commissioner (Appeals) confirmed the order of the adjudicating authority observing that the allegations levelled against the appellants are serious and such irregularties/violations are not supposed to be done by a business house of their repute.

(3.) SHRI M.P. Devnath, learned Advocate, submitted that the physical stock taking was conducted by 5 officers which could not be turned as a thorough and systematic one since the stocks were huge and physical stock taking could not be possible within a short span of 6 -7 hours; that RG 23A Pt. I account for the period June and July, 1995 could also not be maintained due to the non -availability of the staff; that the person who was dealing with the excise had left the service and the new person who was appointed in late July was in the process of preparing the accounts; that, however, raw material accounts were maintained in Raw Material Store ledgers. He emphasized that the duty amounting to Rs. 3,27,902/ - against shortages detected in finished goods stores and raw material stores was debited on 31 -7 -1995 itself in RG 23A Pt II account; that penalty could not be imposed when duty had been debited on pointing out by the department; that further since no malafide has been proved penalty is not imposable; that they pay duty in crores every month and as such there can be no malafide on their part in respect of goods/raw material found short involving duty only Rs. 3.28 lakh. He relied upon the decision in the case of DCW Ltd. v. C.C.E. -1996 (81) E.L.T. 381 (T) in which it was held that penalty should not be imposed when duty has been voluntarily debited. Reliance was also placed on the decision in the case of Caprihans India Ltd. v. C.C.E. -1995 (78) E.L.T. 480 wherein it was held that penalty is not imposable when excess/shortage in stock is not due to malafide but due to improper accounting as the assessee is having huge stock.