ORDER
K.D. Mankar, Member (T)
1. Heard both sides.
2. These are two appeals against a common order. The appeal of the main appellants (who are the manufacturers) is directed against the impugned order of the Commissioned Appeals), who had confirmed the orders of the Additional Commissioner of Central Excise and rejected their appeal. Briefly stated on account of scrutiny of assessment documents and verification of records, it was alleged that:-
(1) The appellants were required to pay a differential amount of Rs. 4,29,920/- in terms of the provisions of the provisions of Rule 57CC of the Central Excise Rules 1944, being the difference between the amount of 8% of sale price of exempted goods cleared to defense and the credit amount actually reversed.
(2) An amount of Rs. 12,592/-towards the duty involved on the amount of debit notes raised on their job workers for failure to return the scrap generated out of the raw material supplied to the job worker to appellants factory.
(3) An amount of Rs. 63,002/- on account of excess credit taken on the furnace oil (credit was restricted only to the extent of 10% and not at the full rate shown on the duty paying document).
(4) An amount of Rs. 14,148/- on account of non-receipt of the raw material sent to the job workers.
(5) An amount of Rs. 6,127/- on account of shortages of certain finished goods in the factory.
3. In the proceedings before the lower authorities, liability to these payments has been confirmed. Besides certain finished goods which were found outside the bonded store room (BSR) were subjected to confiscation appropriate penalties were imposed on the appellant manufacture, and on Shri S.M. Doshi, the Director.
4. The above facts are not in dispute. The appellants are challenging the finding contained in the impugned orders. The appellants have placed reliance on the Tribunal judgment in the case of Pushpaman Forgings v. Commissioner reported in 2002 (149) ELT 490 (Tribunal) to claim that the amount representing 8% value of the finished goods being neither duty nor modvat credit, the same cannot be recovered in the absence of any machinery provisions to effect the said recovery. As reported in ELT 2003 page A89 the Tribunal judgment has been affirmed by the Honorable Supreme Court by dismissing the SLP filed by the Commissioner. Accordingly 1 hold that, confirmation of demand of Rs. 4,29,920/- cannot be sustained and the same is set aside.
5. The next challenge in the appeal relates to confiscation of goods valued at Rs. 2,54,508/- which were not entered in the RG1, due to absence of concerned clerk. The goods were released provisionally and confiscation of released goods is claimed by the appellants to be bad in law.
6. So far on this ground is concerned, I note that the provisions of Rule 173Q(2) are very clear, which empower confiscation of the goods which are not accounted for. It has nowhere come on record as to whether or not any other collateral records were available to suggest that not making an entry in the RG1 was a mere omission in the last link of the entire long chain of account keeping process or otherwise. In case the production under seizure were to figure in other private records maintained (duly intimated under Rule 1739 (5) to the Department) by the appellants and it was the general practice to transfer faithfully all such entries from private records to the RG1, then perhaps, the omission to make entry in RG1 can be claimed to be a case of failure to make an entry and not a case of non-accountal. No such evidence having been furnished the failure has to be treated as case of non-accountal. The goods having been provisionally released in this case, fine imposed consequent to confiscation ought to have been appropriated from the Bond (B-11 bond). But, not doing so, does not affect the position as the appellants themselves were party to the bond and in terms of their failure to produce the goods before the adjudicating authority they were under legal obligation to be subjected to the enforcement of the terms of the bond. The submissions in this regard are therefore rejected.
7. So for as the failure to debit duty of Rs. 23,973/- in respect of the goods being transported in the tempo is concerned the appellant’s grievance is only in respect of 1 out of 4 invoices. It is pleaded that the duty on the said invoice amounting to Rs. 2,843/- was already debited and in confining the duty of Rs. 23,973/- this amount is again included. Except this ground, there is no other challenge to the order demanding duty. Hence the duty amount of Rs. 23,973/- confirmed by the lower authority is reduced by an amount of Rs. 2,430/-, and the balance amount of Rs. 21,130/-is confirmed. Therefore, the penalty imposed ‘ under Section 11 AC shall also be correspondingly reduced to Rs. 21,130/-.
8. So far demanding duty of Rs. 6,127/-, in respect of 118 numbers of axles is concerned, while the appellants claim that the goods were available in the factory, the lower authorities refer to the Panchnama where existence of this position is not reflected. This defense was taken by the Director on 16.12.98 whereas the shortage was recorded on 22.7.98. The lower authorities were therefore right in demanding the duty and imposing equivalent penalty. The appellant’s contention is therefore rejected.
9. So far as confirmed duty of Rs. 14,148/- is concerned, it is pleaded that, non-receipt of import from job workers within 60 days, only can have consequences in the form of attracting duty liability and there can be no penalty. I accept this contention and hold that there can be no penalty. Also the aforesaid amount when lone paid shall also be permitted as credit.
10. So far duty confirmation of Rs. 63,000/- is concerned the appellants accept that the extra credit was taken through mistake. Hence imposition of penalty was not warranted since the extra credit was taken on the basis of a mistake and not through a deliberate design to evade. I accept this submission and the mandatory penalty imposed on this ground is therefore set aside.
11. So far demand of duty of Rs. 12,592/- on account of debit notes
raised against the job workers for non-receipt of scrap from the job
workers is concerned. I hold that it is correctly demanded, since there is
no evidence on record to show that the job workers had cleared the said
scrap on payment of duty. In case the said scrap was to actually come
back to the factory of the appellants, the same would have suffered
corresponding duty at the point of its removal. It is no body’s case that the quantity not received was an invisible loss. The duty demand and the consequential penalty imposed for this demand are sustained and the appellant’s appeal on this point has no merit and is accordingly rejected.
12. As discussed above, since the penalties imposed have been substantially reduced, I hold that there is no case for impositions of penalty on the Director.
13. The appeals are partly allowed in the above terms and the orders of the lower authorities are modified to the extent above.
(Pronounced in the Court on 13/1/04.)