ORDER
C.N.B. Nair, Member (T)
1. All these appeals are directed against the same impugned Order-in-Appeal. Accordingly, they were taken up together and are disposed of under this common order.
2. The assessees are engaged in the manufacture of PVC Sheets. On 3-8-1999, Central Excise officers visited the assessee’s factory and carried out a physical verification of the stock of inputs and finished goods. It was observed that there was a shortage of quantity of one input namely, R.M. Printing Ink involving a Modvat credit of Rs. 27,894/-, The assessee reversed that amount of credit under protest immediately. It was also noticed that inputs and finished products at various stages of production had not been entered in the record of production (RG-1 register). Show Cause Notice was, therefore, issued proposing to confiscate the unaccounted goods and to impose penalty on the assessees. In adjudication that notice was confirmed by the Deputy Commissioner. He confiscated all the raw materials and other goods and imposed a penalty on the appellant and also demanded interest. Revenue is in appeal contending that the quantum of penalty imposed was less than the statutory penalty as contemplated under Section 11AC. The assessee is in appeal contending that there was no legal justification for the confiscation of the goods inasmuch as they had not been or were being cleared clandestinely without payment of duty. During the hearing of the case, learned Counsel has pointed out that the raw materials brought by the assessee being products of other manufacturers on which duty had already been paid, there could be no allegation of evasion of duty in their regard. The remaining goods being at various stages of production the assessee had entered them in production records kept by factory staff. Learned Counsel has pointed out that assessee had explained the correct position on the very next day of visit of the Central Excise Officers under a letter. It is the submission of the learned Counsel that, if at all a charge of failure in writing accounts at various stages alone could arise which attracted a penalty of Rs. 2,000/- contemplated in Rule 226. Learned Counsel has brought to our notice the decisions of this Tribunal in the case of Lakshmi Polypacks Pvt. Ltd. v. C.C.E., Hyderabad-I – 2003 (56) RLT 64. Bhillai Conductors (P) Ltd. v. C.C.E, Raipur – 2000 (125) E.L.T. 781 and other decisions in support of his submission.
3. We have perused the records and have heard the learned SDR also. Part of the goods under confiscation are raw materials themselves. The remaining items are goods in various stages of manufacture. Appellant has pointed out that even the finished goods involved had not been fully packed and therefore, had not reached the stage for their entry in the statutory records. Further, no clandestine intention could be sustained inasmuch as the goods had been entered in the private production records of the assessee.
4. We have perused the records and have considered the submissions made by both sides. No attempt of clandestine production and removal of goods is involved. The case involved is only a failure to enter production at various stages in the excise records. Case law relied supports the assessee. Confiscation of goods and imposition of severe penalty under Rule 173Q etc. are not attracted. Penalty under Rule 226 would suffice. Accordingly, we modify the impugned order so as to impose a penalty of Rs. 2,000/-. The Modvat credit of Rs. 27,894/-in respect of the goods found short already remains reversed. No further action is called for on that score.
5. In the view we have taken above, the appeals of the Revenue fail and the appeals of the assessee are partly allowed as indicated above.
