ORDER
J.N. Srinivasa Murthy, Member (J)
1. This appeal is filed by the above appellant, against the above-captioned Impugned order dated 29.9.95, praying for quashing, imposition of penalty of Rs. 25,000 and appropriation of Bank Guarantee of Rs. 30,000 and for refund of penalty paid and release of Bank guarantee executed.
1. The brief facts of the case are, appellant a SSI unit manufactures PF and UF resins falling under chapter heading 39 of Tariff Act 1985, (Urea, Phenol) under the Central Excise License, availing the benefit under SSI Notification No. 1/93 of 1.3.93 and avails Modvat credit. Acting on intelligence, the officers of Preventive unit of Ambernath, intercepted a vehicle with Registration No. MH05-3542 at 7.30 p.m. on 22.2.94 near Octroi Naka, bordering Ulhasnagar and Ambernath (West). On demand by officers, the driver produced Delivery Challan No. 768/93-94 and a bill of even No. dated 22.4.94 in respect of the goods in the vehicle issued by appellant. They disclosed that UF resins of 3080 kgs. in 14 drums were consigned and transported to M/s. Nirmal Enterprises. Delivery challan disclosed payment of Central Excise duty of Rs. 4928 under GPI No. 828, which was not given to driver, at the factory of despatch. The vehicle was taken back to factory of appellant, on reasonable belief above duty was not paid, for further investigation. Central Excise records viz. RG 23A Part I and II, RGI, PLA GP Books, were verified in the presence of Director Sri K.R. Rao. It was found no Excise duty was paid on the above removal of goods. The vehicle, goods, and incriminating documents were detained and withdrawn on 22.2.94. They were seized (3080 kgs. of UF Resins alongwith vehicle) on 23.2.94. Statement of Driver S.S. Panvelkar, was recorded on 22.2.94. On 23.2.94,1540 kgs. of Urea formaldehyde Resins, and 660 kgs. Phenol Formaldehyde Resins, finished goods were seized from the appellant factory- 900 kgs. of Urea Formaldehyde Resins, rejected goods in the factory, was also seized, as reported by Director Sri K.R. Rao. All the above seized goods were released provisionally, on executing a B-II Bond for Rs. 2,60,000 with a Bank Guarantee of Rs. 30,000. Statement of Sri K.R. Rao, Factory Manager Sri S.K. Pandey was recorded on 22.2.94. Statement of regular customer Sri M.S. Khirari, Director of M/s. Reliable Plywood Industry (P) Ltd., was also recorded in the Investigation. Enquiry with Octroi and Central Excise Officers were also made. Further statement was also recorded on 25.7.94 of K.R. Rao, confronting the result of the same. On 23.2.94, the above Central Excise Officers conducted physical stock challenge and found shortage of 220 kgs. of PF Resins. K.R. Rao agreed to pay duty thereon.
2. The gist of the Investigation is that appellant had clandestinely removed 3080 kgs. of UF Resins on 22.2.94 valued Rs. 24,640 and 18,700 kgs. of UF Resins valued at Rs. 1,37,346.00 during June 93 to Jan. 94, with intent to evade payment of Excise duty on such removals, and therefore contravened Rule 9(1) read with Rule 173F and Rule 173G(1), Rule 52A read with Rule 173G(1), Rule 53 read with Rule 226 and Rule 173G(4) of Central Excise Rules. On 11.8.94 Show cause notice was issued to appellant leging above contraventions, calling upon to show cause as to why (a) Central Excise duty of Rs. 4928 on the removal of 3080 kgs. of UF Resins should not be demanded and covered Under Section 11A of Central Excise Act 1944 read with Rule 9(2) of Central Excise Rules. (b) Central Excise duty of Rs. 27469.20 on the removal of 18700 kgs. of F Resins cleared during the above period should not be demanded and recovered under the same provision as above. (c) Central Excise duty of Rs. 1144 on shortages of 220 3s. of UF Resins should not be demanded and recovered under the above provisions. (d) Seized goods both unaccounted in RGI and that cleared without payment of duty should not be confiscated under Rule 173Q and/or Rule 209 and/ or Rule 226 of Central Excise Rules. (e) Vehicle bearing Registration No. MH05-3542 used for transporting ffending Excisable goods on 22.2.94 valued Rs. 2 lakhs should not be confiscated, (f) enalty should not be imposed upon them under Rule 9(2) and/or Rule 52A and/or Rule 73Q and/or Rule 210 and/or Rule 226 of Central Excise Rules, (g) Appellant should roduce seized goods and vehicle No. MH 05-3542 released provisionally to them, before the Adjudicating Authority in terms of bond, failing which to show cause why security irnished with bond may not be appropriated. Appellant replied it on 4.5.95. Personal tearing was held on 11.8.95. Appellant attended with Consultant, R.H. Dongaonkar. after hearing them, and considering the available material, Commissioner, Central Excise, Bombay III passed the Impugned order, confirming the demand of duty of Rs. 33,541.00 Under Rule 9(2) read with Section 11A of Central Excise Act, which was already paid by appellant, appropriated and adjusted the same to they duty confirmed. Penalty of Rs. 5,000 was imposed on appellant Under Rule 173Q of Central Excise Rules. Seized goods and Vehicle No. MH05-3542 are liable to confiscation Under Rule 173Q and Section 115(2) of Customs Act as made applicable to Central Excise case. They were leased provisionally on execution of bond and furnishing of security. Appellant was asked to produce before Adjudicating Authority in terms of the bond. On the failure of appellant to produce the same, total security of Rs. 30,000 was appropriated. Hence he appeal.
3. The learned Counsel for appellant Dr. D.M. Misra has argued that during personal hearing the appellant was not called upon to produce seized goods. Delivery challan ontained GP No. Appellant has explained the charges in show cause notice and paid necessary Central Excise duty on the goods removed and on shortages. There was no nala fide intent to evade duty. It is a SSI Unit. Penalty imposed is not in commensurate with the conduct of appellant in paying duty and conceding the case. No opportunity was given to produce the seized goods. Personal Hearing memo Ext.D is silent in that egard. Appropriation of Bank Guarantee is not correct. , in the case of Indra Metal Works–(Para 7) clearly applies as it is a similar case. P 9 of mpugned order not supported by any material. The learned JDR Sri B.K. Chaube has supported the Impugned order. Chronology of events filed by appellant shows duty element is not in dispute. Excessive penalty and appropriation of Bank Guarantee is contested.
4. Perused the Show cause notice, Reply, Impugned Order and documents available on record. Also perused in the case of Indra Metal Works v. CCE. Pune (Para 7). According to it before appropriation of Bank Guarantee, the adjudicating Authority has to first ask the appellant to produce the goods and on his failure, to enforce the bond terms and pass orders for appropriation of security amount under Section 33 of Central Excise Act. Rule 173Q and 206(3) of Central Excise Rules (pare 5). The above case law is applied to the case on hand and discussed below.
5. The case of the appellant, as per his statement Under Section 14 of Central Excise Act, reply to show cause notice, and appeal memorandum, and arguments before the Tribunal, is “being technocrats, they are not much, of know of Central Excise procedure and a small SSI unit. The Director had instructed the Manager that on 22.2.94 at about 5.00 p.m., while going on urgent work that as soon as vehicle returns from Bhivandi, to the factory, it should be loaded with 14 barrels of UF Resin, and after preparing all the relevant documents including GPI, the vehicle should be allowed to go with all the despatch documents, from the factory, and accordingly concerned person prepared Delivery Challan and bill, and in the meanwhile he got a call from his house, and he had to rush and instructed the workers not to leave the lorry from factory premises, before his arrival, but workers allowed it to go with goods, delivery challan and bill, inadvertently due to misunderstanding by them. When GPI is mentioned in the body of Delivery Challan, there was no intention to evade Excise duty. There was always sufficient amount of credit in RG 23A Part II account, as per the enclosed chart. There was no question of evading payment of Excise duty. GPI could not be prepared on that day for the above reason. On 2.3.94 duty of Rs. 4928 was debitted under E No. 953. Similarly duty of Rs. 28613.20 was also debitted in 30.10.94 under E No. 688 in RG 23A Part II Register. They could not locate where the mistake had occurred for item (2) and (3) in show cause notice. For items 4 to 6, lenient view is requested, since duty is already debitted, and sought for release of offending goods and vehicle, with assurance in future it will not be repeated and more care will be taken in maintaining Central Excise records”. As per the enclosed chart as on 22.2.94 Modvat amount balance in RG 23A Part II for 93-94 was Rs. 3,30,037.00 and as on 29.2.94 it was Rs. 5,20,140. RG 23A Part II extract shows debit of duty in seized goods as per show cause notice on 12.2.96. Penalty amount of Rs. 25,000 was credited under TR6 challan No. 6/95-96. Under Annexure ‘D’ the appellant was given personal hearing notice on 28.7.95 to appear on 11.8.95.
6. From the above it is clear that appellant was not asked to produce the seized goods and vehicle on a particular date. In view of show cause notice demand and reply to it by appellant, it was necessary to fix date for production. In the absence of it, failure of production cannot be fastened on the appellant. Show cause notice mention is vague and general. It was not specific. In personal hearing also, nothing was referred in this regard as per Impugned order. Looking to the facts and circumstances of this case available on record, penalty imposed is excessive. Appellant has debitted duty amount and paid duty penalty amount. He has admitted lapses. There are no sufficient grounds to show mala fides in his action for clandestine removal. RG 23A Part II account and statements shows bona fides. So this is a deserving case to reduce penalty. Hence I pass the following order.
ORDER
For the reasons discussed above, Impugned order is set aside for appropriation of Bank Guarantee of Rs. 30,000 as prayed for, and penalty is reduced to Rs. 10,000, and confirmed regarding the Excise duty demand and adjustment and appropriation of payment. Appeal is allowed accordingly with consequential relief as per law.