ORDER
K. Sankararaman, Member (T)
1. The appeal is against the Order-in-Appeal passed by the Commissioner (Appeals), Ghaziabad partially allowing the appeal filed before him by the appellant but retaining fine in lieu of confiscation of Rs. 40,000/- and penalty of Rs. 25,000/- on them. Originally the Additional Commissioner of Central Excise, Ghaziabad had, vide his order dated 12-9-1996 held that they had contravened the provisions of Rules 53 and 173G as they had stored excisable goods outside the approved bonded store room and has also not kept the statutory records properly as certain quantity of goods in packed condition were found unaccounted for in the records and which had been stored in the first floor portion of their factory premises in spite of being in the bonded store room situated in the ground floor. After show cause notice had been issued to the appellant countering these charges they replied to the same and the adjudicating authority held that the charges have been proved and appropriated a sum of Rs. 80,000/- from the bond executed by them for releasing of the offending goods which had been seized but released against the security. The sum of Rs. 80,000/- was appropriated to the cost of the goods as they were not available for confiscation. He imposed a penalty of Rs. 50,000/- under Rule 173Q for violation of the provisions of Rules 53 and 173G of the Central Excise Rules, 1944. The aforesaid amounts were reduced by the Commissioner (Appeals) as stated above. The present appeal challenges the Order-in-Appeal.
2. Shri Rajesh Chhibber, learned Advocate stated that the storage of excisable goods outside the approved bonded store room was because of market conditions which had led to accumulation of heavy stock in the factory. It is a fact which had come out on record and referred to in the adjudication order that the bonded store room was full and the appellant had no choice but to keep their production outside the bonded store room as they were new licensee they were not familiar with proper requirement under the Central Excise law whereby they failed to apply to the Department for permission to store the goods outside the bonded store room. Had they made such an application it is likely that the Department would have granted the permission and they would have complied with whatever condition the Department would have imposed. As regards the other charge of their not having entered the stock in the statutory records which has led to the charge of not accounting for the goods, learned Counsel submitted that it was their practice to make the entries in the RG 1 register at the time goods are stored in the bonded store room. There is no allegation at all that there was any attempt to remove the goods without payment of duty and without accounting them in the statutory record. The goods were stored in the factory premises only and confiscation of the goods was not called for as had been held by the Tribunal in a number of earlier decisions. He pleaded that there is no mens rea involved and it is a bona fide failure to keep the RG-I register uptodate.
3. Shri A.M. Tilak, learned Departmental Representative stated in reply that the matter has been properly considered by the adjudicating authority and the Commissioner (Appeals) has also granted substantial relief by reducing the quantum of fine and penalty. Fine and penalty fully justified in the facts of the case and considering the amount of duty and value involved, this cannot be said to be either excessive or disproportionate. He pleaded that no interference with the findings of the Commissioner (Appeals) would be called for.
4. The arguments have been considered. The storage of goods even inside the factory has been found to be in a place other than the approved bonded store room. The provisions of Rule 53 have been clearly violated. Under Rule 173Q(1)(b) if any manufacturer does not account for any excisable goods manufactured, then all such goods shall be liable to confiscation and the manufacturer shall be liable to a penalty not exceeding three times the value of the excisable goods in question. This sub-rule does not refer to any intent to evade payment of duty. In the present case, the goods had been found to have been stored in the first floor portion of the factory premises which was not the approved bonded store room. The offence under Rule 53 has been committed and penal action under the same was justified. The Commissioner (Appeals) has observed in his order that the goods were found in the factory and there was no attempt at clandestine removal of the goods and since goods were not kept in the bonded store room due to lack of space. He referred to the Tribunal judgment in the Garden Silk Mills v. Collector of Central Excise 1991 (51) E.L.T. 373 (Tribunal). In the aforesaid decision, the confiscation of the goods was held to be not called for but penalty was found to be justified. The applicability of Sub-rule (1)(b) of Rule 173Q was not considered in the Garden Silk Mills case. But as there is a clear finding in the Commissioner (Appeals)’s order that there was no intent for clandestine removal and stored in the outside bonded store room was because of lack of space, a token fine and penalty would be justified. In the circumstances, I hold that the ends of justice would be met if the fine is reduced to Rs. 10,000/- and penalty to Rs. 5,000/-. The impugned Order-in-Appeal is modified to this extent. The appeal is partially allowed.