ORDER
P.G. Chacko, Member (J)
1. The brief facts of the case are as follows :- The appellants are manufacturers of Guar Gum Powder and other products falling under Chapter 13 of the Schedule to the Central Excise Tariff Act, 1985. On 30-11-98, officers of Central Excise visited their factory and, on verification of stock of final products, found an excess quantity of 36.109 MTs of Guar Gum Powder (in short, G.G. Powder) vis-a-vis the recorded balance in the RG-I. Believing that the goods were liable to confiscation under Rule 173Q of the Central Excise Rules 1944, the officers seized the said excess quantity of G.G. Powder and handed it over to the assessee for safe custody. On the basis of the investigative results, the department issued show-cause notice dated 31-3-99 to the appellants, alleging that the above quantity of G.G. Powder valued at Rs. 25,27,630/- and involving Central Excise duty to the tune of Rs. 2,02,210/- had been kept in their factory for purpose of clandestine removal without payment of duty, and proposing under Rule 173Q to confiscate the goods and impose penalty on the appellants. The proposals in the show-cause notice were contested. In adjudication of the dispute, the Joint Commissioner of Central Excise ordered confiscation of the above quantity of G.G. Powder under Rule 173Q on the ground of non-accountal in RG-I. He, however, gave option to the party to redeem the goods on payment of a fine of Rs. 8 lakhs and directed that the goods shall be entered in the RG-I and cleared on payment of appropriate duty of Excise. He also imposed a penalty of Rs. 1 lakh on the assessee under Rule 173Q. The appeal preferred by the aggrieved asscssee against the order of adjudication was rejected by the Commissioner (Appeals). Hence the present appeal.
2. I have examined the records and heard both sides. Ld. Advocate Sh. Pravecn Sharma for the appellants submits that the quantity of 36.109 MTs of G.G. Powder, which was found in the Bonded Store Room (BSR) in excess over the RG-I recorded balance on 30-11-98 was, in fact, a quantity which ought to have been kept in the Finishing Room and the same happened to be shifted from that room to the BSR on account of certain floor maintenance works which were underway in the finishing room on the day of the officers’ visit. Ld. Counsel further submits that, though the officers’ proceedings were carried out in the presence of the authorised signatory of the appellant-company, the latter omitted to mention to the officers about the transfer of the 36.109 MTs of the goods from the Finishing Room to the BSR. This explanation offered by ld. Counsel requires to be rejected at the outset inasmuch as the appellants have never had such a case at the investigative or later stages of the case. Ld. Counsel then proceeds to challenge the order of the appellate authority on the strength of case law. He submits that the lower appellate authority has erroneously attempted to distinguish the Tribunal’s decision in Bhillai Conductors (P) Ltd. v. CCE, Raipur [2000 (125) E.L.T. 781 (T) = 2000 (91) ECR 569] and has wrongly followed the decisions rendered in Jagdamba Spinning and Weaving Mills v. CCE, Chandigarh [2000 (115) E.L.T. 353] and Autolite India ltd, v. CCE, Jaipur [1997 (93) E.L.T. 397]. Ld. Counsel submits that the decision in Bhillai Conductors (supra) is squarely applicable to the facts of the present case and that the said decision has been consistently followed by this Tribunal in a line of cases involving similar facts. In the instant case. Counsel submits, the finding by both the authorities below is to the effect that 36.109 MTs of finished goods were kept in the BSR unaccounted in RG-I register. Both the authorities have held that a case of non-accountal in RG-I attracts the penal provisions of Clause (b) of Rule 173Q(1). Ld. Counsel would challenge this view by submitting that it is against the view taken by this Tribunal in Bhillai Conductors and consistently followed in subsequent cases. He submits that intent to evade payment of duty is a necessary pre-requisite for confiscation and penalty under Rule 173Q on the ground of non-accountal in statutory records. He submits that there is not even remote evidence, in the instant case, of any attempt on the
part of the appellants to remove the aforesaid quantity of G.G. Powder clandestinely from the BSR. In the absence of positive evidence of any such attempt with intent to evade payment of duty on the goods, there could have been no valid confiscation or penalty under Rule 173Q. Ld. Counsel has also relied on the following decisions of the Tribunal :-
(i) Rashtriya Audyogic Sansthan v. CCE [2001 (135) E.L.T. 353 (T) = 2001 (43) RLT 38] (ii) CCE, Jaipur v. Rose Metal (P) Ltd. [2001 (133) E.L.T. 217 (T) = 2001 (45) RLT 136] (iii) S. Kumar Detergent (P) Ltd. v. CCE, Delhi [2002 (139) E.L.T. 302] (iv) United Phosphorus Limited & Ors. v. CCE, Surat [2001 (133) E.L.T. 691 (T) = 2001 (46) RLT 362].
Ld. Counsel submits that, in view of the above case law, the order of confiscation of the seized goods and imposition of penalty on the appellants cannot be sustained in law. According to him, a case of non-accountal simpliciter would, at best, attract the penal provisions of Rule 226 only. It is his further case that the quantum of redemption fine imposed by the adjudicating authority is too heavy to match the offence found against the appellants. He has pleaded to the same effect in relation to the penalty as well.
3. Ld. JDR, Sh. S.C. Pushkarna reiterates the findings of the original and first appellate authorities. He submits that non-accountal of finished goods is a breach of Rule 53, which attracts the penal provisions of Clause (b) of Rule 173Q (1), for which, according to Id. DR, there is no requirement of mens rea. Both the authorities have, therefore, confiscated the goods and imposed penalty on the assessee in accordance with the provisions of Rule 173Q.
4. I have examined the submissions. The department’s allegation of non-accountal of finished goods has not been successfully contested. The short question to be considered is whether a case of non-accountal simpliciter would attract confiscation and penalty under the provisions of Rule 173Q of the Central Excise Rules, 1944. It has been held by this Tribunal in the case of Bhillai Conductors (supra) that non-accountal of finished goods in breach of the provisions of Rules 53 and 173G of the Central Excise Rules, 1944 would attract the penal provisions of Clause (d) of Rule 173Q(1), which requires mens rea on the part of the assessee. That decision was rendered by a 2-Member Bench of this Tribunal and the same has been consistently followed by this Tribunal in later cases including some of the cases cited by ld. Counsel. I note that the lower appellate authority has relied on Autolite India Ltd. (supra) and Jagdamba Spinning and Weaving Mills (supra) for upholding confiscation and penalty. But the decision in the Autolite India case, which was also rendered by a 2-Member Bench, was taken into account by the coordinate Bench in Bhillai Conductors (supra) and Bhillai Conductors was not considered by the ld. Single Member in jagdamba Spinning and Weaving Mills (supra). In view of this position, the reliance placed by the lower appellate authority on the decisions in Autolite and Jagdamba Spinning and Weaving Mills cannot be accepted for upholding the impugned order. In all the other decisions cited before me, I find, the view taken in Bhillai Conductors appears to have been consistently followed.
5. It has been held in Bhillai Conductors (supra) that a case of non-
accountal of final products without mens rea is a minor offence which can at
best attract a penalty of Rs. 2000/- alongwith confiscation of the goods under
Rule 226. Ld. Counsel has accepted the appellants’ liability under Rule 226. I,
therefore, set aside such penalty as is in excess of Rs. 2000/- and sustain the
penalty only to the extent of Rs. 2000/- under Rule 226. As regards confisca
tion, which also has been held to be permissible under Rule 226, I find that
the confiscation of the goods is justifiable on the evidence on record of this
case. However, it appears to me that a redemption fine of Rs. 3 lakhs is too
harsh to match the circumstances of the case. In any case, the goods on re
demption will have to be cleared only on payment of duty. Having regard to
the totality of the facts and circumstances of the case, I reduce the quantum
of redemption fine to Rs. 2 lakhs. The appellants are directed to get the goods
redeemed/cleared on payment of a fine of Rs. Two lakhs and appropriate
duty of Excise within a period of three months from today. The appeal is dis
posed of in these terms.