ORDER
J.H. Joglekar, Member (T)
1. On hearing the stay application we took up the Appeal No. E/2872/99-Mum for final disposal along with Appeal No. E/2873/99-Mum.
2. These two appeals arise out of the same order of the Commissioner of Central Excise (Appeals) and are therefore being disposed of vide this common order.
3. M/s. Sharda Textile Mills are processor of cotton fabrics. Shri Ramesh Kagzi is the Managing Director thereof. On 13.9.95 on verification of physical stock, excess stock of 34,084.12 L.Mtrs. of processed MMF was found. It was also found that the RG1 register was not written for one day. Excess quantity of raw materials namely grey fabrics was also noticed and seized but was released thereafter. Show cause notice was issued alleging liability to confiscation of processed fabrics valued at Rs. 17,19,315.85 under Rules 173Q and Rule 226 of the Central Excise Rules, 1944 and also alleging levy of penalty on the assessee and the Managing Director thereof under the said rules. The orders of confiscation were made under Rule 226 only. Penalty of Rs. 2000/- was imposed on the factory under Rule 226 of the Central Excise Rules. Penalty of Rs. 50,000/- was imposed on Shri Ramesh Kagzi under Rule 209A of the Central Excise Rules. The Commissioner (Appeals) having upheld the orders, the preset appeals are before us.
4. Shri Prakash Shah does not contest the liability to confiscation of the goods but submits that the fine is excessive. We find that the fine prescribed for redemption is about 50% of the value of the goods. Unlike Section 125 of the Customs Act, 1962, the law relating to Central Excise does not provide any guide lines for the prescription the description of the such fine. The present appellants are job workers and their interest in the goods is limited to the job work charges. In the case where the goods are owned by a processor, there may be substantial margin of profit. In the present case the margin will be necessarily low and therefore such a heavy fine would not sustain. Therefore while maintaining the penalty of Rs. 2000/- we deem it proper to reduce, the quantum of fine of Rs. 50,000/- only.
5. As regards Shri Ramesh Kagzi we find that the penalty has been imposed in terms of Rule 209 A of the Rules. For such penalty to sustain it has to be shown that the person charged therewith had conscious.
Knowledge that this activities would render some goods liable to confiscation. In the judgement in the case of S.R. Jhunjhunwala Vs. Collector of Central Excise, Mumbai-II [1999 (114) ELT 890 (Tribunal)]. The Tribunal observed as follows:
“This brings us to the question of penalty on all the appellants herein. As for the penalty imposed on the appellants under Rule 209A we find that the show cause notice has not set out specific allegations against each of them. The Collector’s reasoning in this regard is somewhat cryptic by merely saying that the ten appellants knowingly dealt with excisable goods which were undervalued. There is no elaboration as to how this conclusion is arrived at and how the ingredients of Rule 209A are satisfied. Therefore we hold that penalty on these appellants is not sustainable, and it is accordingly set aside”.
6. This observation would apply equally to the facts before us. The show cause notice does not make any specific allegation as to the part played by Shri Ramesh Kagzi. We therefore, allow his appeal and set aside the orders of penalty imposed upon him.
7. The appeals are disposed of in these terms. The stay application filed by M/s. Sharda Textile Mill Ltd. also stands disposed of.
(Pronounced in Court)