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TAXAP/1861/2009 1/ 7 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1861 of 2009
=========================================================
COMMISSIONER
OF CENTRAL EXCISE & CUSTOMS - Appellant(s)
Versus
COLORTEK
(INDIA) LTD., - Opponent(s)
=========================================================
Appearance :
MR.VARUN
K.PATEL for
Appellant(s) : 1,
None for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE D.A.MEHTA
and
HONOURABLE
MS.JUSTICE H.N.DEVANI
Date
: 22/07/2010
ORAL
ORDER
(Per
: HONOURABLE MS.JUSTICE H.N.DEVANI)
1. The
appellant-revenue has challenged order dated 14.11.2007 made by the
Customs, Excise And Service Tax Appellate Tribunal (the Tribunal)
proposing following five questions :
(1) Whether, in the facts and circumstances
of the case, when the finished goods as well as semi-finished goods,
though not accounted for, were found lying in the factory premises
during the visit of the Central Excise Officers, independent
evidences like availability of man-power near the goods for removal
thereof, transport vehicle in which the same was intended to be
loaded as well as other doubtful activities going on in the premises
during the visit of the officers corroborating the intention of the
respondent company of removal of the said goods without payment of
duty is necessary for passing confiscation order and imposition of
penalty on the respondent company?
(2) Whether, in the facts and circumstances
of the case, when the unaccounted for goods were found lying in the
factory premises at the time of visit of the Central Excise Officers
and the authorized signatory and Manager (Works) could not give
explanation for the same and having specifically admitted in their
statements that the said goods placed under seizure were fully
finished and excess and not accounted for in the statutory records,
the action of imposition of penalty on the respondent company is not
justifiable merely on the ground that it is a technical contravention
only?
(3) Whether, the offence committed by the
respondent of non-maintenance of statutory record is only a technical
contravention since it does not indicate intention on the part of the
respondent to remove the said goods without payment of duty?
(4) Whether, as per Rule 53 of Central
Excise Rules, 1944 if any manufacturer does not maintain stock
account in such form and enter in such account the daily production,
it amounts to technical contravention only and corroborative evidence
is necessary to indicate that the goods were not entered in RG-1
register with an intention to remove them without payment of duty?
(5) Whether, the lapse on the part of the
respondent of not making entry of the goods in the RG-I register can
be treated as condonable lapse in the facts and circumstances of the
case?
Subsequently
the learned Counsel for the appellant revenue has proposed the
following additional question :
Whether mens rea/intention to evade duty
is the condition precedent for confiscation or penalty under Rule
173Q(1)(b) of the Central Excise Rules 1944 ?
2. The
respondent assessee had not accounted for 611.40 Kgs. of fully
finished goods valued at Rs.1,60,153.00 lying in its factory in R.G.1
Register. Show cause notice dated 12.9.1997 proposing confiscation of
the seized goods as well as imposition of penalty under Rule 173Q(1)
and Rule 209A of the erstwhile Central Excise Rules, 1944 (the Rules)
came to be confirmed, holding that the goods were liable to
confiscation and the assessee was liable for penalty under Rule 173Q
(1) of the Rules. Accordingly, the seized goods were ordered to be
confiscated. The Bank Guarantee of Rs.30,000/- came to be
appropriated in lieu of confiscation of seized goods along with
penalty Rs.2000/-, duty of Rs.25,120.80/- came to be confirmed and
penalties of Rs.500/- each came to be imposed on the Manager and
Authorised Signatory. The assessee carried the matter in appeal
before the Commissioner (Appeals), who set aside the confiscation but
maintained the penalties. Revenue carried the matter in appeal before
the Tribunal but did not succeed.
Learned
Standing Counsel for the appellant revenue has vehemently assailed
the impugned order submitting that the show cause notice had been
issued against the respondent for contravention of the provisions of
Rule 173Q(1)(b) as well as 173Q(1)(d) of the Rules. It is submitted
as per Rule 53 of the Rules, every manufacturer is required to
maintain a stock account in such From as the Commissioner may in any
particular case or class of cases allow, and shall enter in such
account daily the matters enumerated thereunder. In the light of the
provisions of Rule 173Q(1)(b) and Rule 173(1) (d) of the Rules, if
any manufacturer does not account for any excisable goods
manufactured, produced or stored by him; or contravenes any of the
provisions of the rules with intent to evade payment of duty, all
such goods are liable to confiscation. It is submitted that in the
present case the respondent had contravened the provisions of Rule
53 inasmuch as the finished goods were not entered in RG1 register,
hence, the goods were also liable to confiscation under Rule 226 of
the Rules. It is submitted that in the facts of the present case
there being a clear contravention of the provisions of Rule 53, the
Tribunal was not justified in holding that confiscation was not
warranted. It is submitted that the fact that the finished goods
were not entered in the RG-1 Register is indicative of the intention
of the respondent to evade payment of duty. Alternatively, it was
submitted that Rule 173Q(1)(d) is a stand alone provision and even
in absence of any intention to evade payment of duty, the
unaccounted goods were liable to confiscation.
As can be seen from the order made by
Commissioner (Appeals), upon appreciation of the evidence on record,
he has found as a matter of fact that revenue was not in a position
to prove that there was any intention on the part of the respondent
assessee to evade payment of duty and has accordingly held that the
goods were not liable to confiscation. However, he has maintained
penalty for non maintenance of statutory records.
5. The
Tribunal in the impugned order has concurred with the findings
recorded by Commissioner (Appeals) and has found that there was no
evidence to show that the assessee had any intention to remove the
goods without payment of duty.
6. Thus,
both Commissioner (Appeals) as well as the Tribunal have recorded
concurrent findings of fact after appreciating the evidence on record
to the effect that there was no intention on the part of the
respondent to evade payment of tax. However, since the finished had
not been entered in the RG-1 Register, the penalty has been
confirmed. Though as contended by the learned counsel for the
Revenue, even if Rule 173Q(1)(b) can be said to be a stand alone
provision operating on its own independent of Rule 173Q(1)(d), it is
not every procedural irregularity which would entail confiscation.
7. As
is apparent from the impugned order of the Tribunal, the Tribunal has
based its conclusions on the aforesaid concurrent findings of fact
recorded by it. It is not the case of the revenue that the Tribunal
has placed reliance upon irrelevant material or that it has ignored
relevant material. In the light of the findings of fact recorded by
the Tribunal it is not possible to state that the conclusion arrived
at by the Tribunal is in any manner unreasonable or perverse so as to
give rise to a question of law warranting interference.
8. In
the circumstances, in absence of any question of law, much less a
substantial question of law the appeal is dismissed.
Sd/- Sd/-
(D.A. Mehta, J. ) (H.N. Devani, J.)
M.M.BHATT
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