ORDER
S.K. Bhatnagar, Vice President
1. This is an appeal against the order of Commissioner (A), Allahabad dated 29-11-1996.
2. Ld. Counsel stated that the appellants were engaged in the manufac-ture of electrical stampings and die cast rotors and stators and exhaust fans. The Central Excise officers visited their factory on 17-2-1994 and verified stocks and accounts. They detected excess of finished goods over and above the recorded balance in RG 1 and seized the same on the ground that they were kept for clandestine removal. The officers also allegedly detected shortages against recorded balance of various items. After issue of show cause notice the case was adjudicated by the Addl. Collector who confiscated the seized goods but gave option to redeem the same on payment of fine and confirmed the duty in respect of goods alleged to be removed clandestinely. Ld. Addl. Collector also imposed penalty. The ld. Commissioner (A) also did not appreciate the facts correctly and did not apply his mind and confirmed the order. Hence the petition. It was their contention that the excess stock found was the production of the day. Their employee had stated that it could not be recorded in RG 1 due to negligence of the labourers but that does not mean that it was not the production of the day. It only meant that simultaneous entry could not be made due to the negligence of the labourers.
3. It was their submission that sub-entries in RG 1 could always be made at the end of the day. It was also their submission that there is no reason to doubt their bona fides as the goods found in excess were duly recorded in the raw material account and therefore was bound to be recorded in other prescribed records and could not be clandestinely removed and it is important to note that the entries were required to be filed in RG 1 datewise and not timewise and can always be made at the end of the day.
4. It was also their submission that the so-called shortages were also not due to any clandestine removal but on account of captive consumption. They were removed for this purpose just before the officers visited without issuing the gate passes but that was only a technical lapse and the gate passes could not be issued because the officers reached soon after the goods were removed for captive consumption. It was their submission that the department has alleged but not substantiated surreptitious removal and the impugned orders are based on presumption and surmises without any complete evidence or record. It was also their submissions that in respect of the goods found in the factory there was no warrant for confiscation and imposition of penalty.
5. Ld. DR drew attention to the impugned orders and reiterated the department’s view and emphasised that the facts speak for themselves. Admittedly there was no entry in the RG 1 in respect of the goods found in excess at the time of visit of the officers and no gate pass had been issued in respect of the goods said to be removed for captive consumption. Therefore, the officers were justified in ordering confiscation, demanding duty and imposing penalty. He would also like to mention that on the date of their visit the employees could not give any satisfactory explanation and had on the contrary accepted that the entry could not be made due to negligence of the labourers.
6. I have considered the above submissions. I observe that the ld. DR’s contentions have strong force..It is a case arising out of physical verification of stocks and accounts and evidently both excesses and shortages were noticed for which no satisfactory explanation was forthcoming. On the contrary the employee of the appellants themselves had stated that the entry in the RG 1 could not be made due to negligence of the labourers. In the circumstances the appellant were responsible.
7. Insofar as the appellant’s claim that the excess found was days production which could be entered at the end of the day is concerned the onus to prove that this was so shifted on to them once the department could show that the goods had not been accounted for. They have however not produced any evidence in the form of figures documentary or circumstantial evidence in support of their contention. Therefore it appears to be an afterthought. Insofar as the shortages are concerned again beyond stating that the quantity in question had been removed for captive consumption no evidence has been produced in support thereof and admittedly no gate pass had been issued. Their contention that gate pass would have been issued but for the visit of the officers at that time lacks conviction as on one hand their employee has accepted that the goods were cleared without payment of duty, on the other hand a gate pass is required to be issued at the time of clearance and not subsequently. Their explanation in this regard is also therefore not satisfactory. In the circumstances the goods found in excess were liable to confiscation and the duty in question was required to be demanded. However, the punishment must always be proportionate to the seriousness of the offence and the fine and penalty imposed in this case appears to be much on the higher side. Hence, looking to the totality of facts and circumstances, I reduce the redemption fine (from Rupees Fifty Thousand Only) to Rs. 12,000/- (Rupees Twelve Thousand Only) and the penalty (from Rupees Fifty Thousand Only) to Rs. 10,000/-(Rupees Ten Thousand Only). But for this modification the orders are other wise confirmed. The appeal is disposed of in the above terms.