ORDER
K. Sreedharan, J. (President)
1. Appellants herein are manufacturers of Submersible Winding Wires. Wires manufactured by them are having ISI specification. In order to satisfy the ISI standard these wires have to be subjected to rigorous tests. The tests include 7 day air oven ageing test. For one day the wires have to be submerged in water and electrical current of 3000 volts to be passed through. After this submersion test it has to be dried and subjected to further test before affixing ISI marking. To get final product, rigorous tests for about 10 days is required.
2. Officers of the Excise Department visited the factory of the appellants on 12-4-1996 at about 11 A.M. At that time they found submersible winding wires in various stages of its production. On the ground that the appellant did not enter the quantity which reached the marketable stage in the RG 1 register, proceedings were initiated for violating the rules regarding maintenance of register. Since no finished products were removed from the factory, no duty was imposed on the manufacturer, the appellant. On the ground of having violated the rules in not maintaining proper register, Submersible Winding Wires measuring 513.160 Mts. valued at Rs. 12,64,396 were confiscated under Rule 173Q of the Central Excise Rules, 1944. These confiscated goods were permitted to be redeemed on payment of redemption fine of Rs. 5 lacs. For contravening the provisions of Rule 53 of the Rules, a penalty of Rs. 4 lacs was also imposed on the appellant under Rule 173Q. Aggrieved by the order of the adjudicating authority in the above terms, appeal was preferred to the Commissioner (Appeals). By Order-in-Appeal No. 36-CE/MRT/99, dated 22-1-1999 the appeal has been dismissed. Hence the present appeal.
3. Appellant is manufacturing Submersible Winding Wires. Before marking the same they have to be tested as per standard prescribed by the Bureau of Indian Standard. The testing takes nearly 10 days. Air oven ageing test takes seven day. Then water immersion test for a day, wherein the insulated wire is submerged in water and electrical current of 3000 volts is passed through. This is so done for finding out the strength of insulation. Only thereafter the wire has to be dried for packing and removal from the factory. Only after the testing is over and ISI marking is pasted in the final packing, can it be sold to dealers or removed from the factory. During this period of testing, according to the appellant, his factory will be having no marketable goods. During that period no entry can be made in RG 1 as prescribed under Rule 53 of the Rules. Manufacturers got sanction from the concerned authorities way back in 1987 to resort to that course in maintaining RG 1 register. The declaration filed pursuant to the permission granted by the Commissioner was made available to me at the time of hearing of this appeal. For a proper understanding of that I read the same :
“The Superintendent,
Central Excise,
M.D.R.II
NOIDA
Dear Sir,
Sub : Permission not writing Daily A/c under Rule 53.
We request you to permit us for availing facility provided in rule 53 for not
making Nil entry in the R.G.I register and necessary declaration is given as
under.
DECLARATION
The Collector of Central Excise, U.P. having permitted me/us in relaxation of the provisions of 53 read with Rule 226 of the rule Central Excise Rules, 1944, to make entries in different opening of the stock account only on those dates when there is any transaction of the nature mentioned in the said rule in respect of the particulars, description, variety, size of packing of the excisable goods, I/we hereby solemnly declare that no such transaction has been taken place on any date for which no entries are made in the stock account for the particulars description/variety/size of packing of the goods I/we hereby undertake to make regular daily entries in said account in respect of each description/variety/size of packing of the goods in respect of each transaction mentioned in Rule 53 of the said rules of the particular day.
Thanking you,
Yours faithfully,
For National Cables
Sd. Proprietor”
This document shows that permission was granted by the Department to the manufacturer exempting him from entering the details daily.
4. Learned Counsel representing the appellant submitted that entries in RG-I are not to be made as and when the goods reach marketable stage. Goods manufactured in the course of a day is to be entered in the register at the end of the day or early in the beginning of the succeeding day. As far as the factory day of the appellant is concerned, it begins at 9 A.M. and ends at 9 A.M. succeeding day. The goods which reached marketable stage during this period or one factory day, is to be entered just before 9 A.M. on the succeeding day. Officers of the Excise Department visited the factory premises at 11 A.M. on 12-4-1996. On 11-4-1996 appellants’ factory had not produced any marketable Submersible Winding Wires. So no entry could be made at 9 A.M. on 12-4-1996. When the officers visited the factory, Submersible Winding Wires were at various stages of the process of manufacture. In a case where the goods are to satisfy ISI standards, only after the entire tests are over, will they become marketable. Before they reach that stage at which ISI marking could be affixed in the process of manufacture, Goods which are in the process of manufacture are not to be entered in the RG 1 register. In support of his contention that the goods continued to be in the manufacturing process till I.S.I, mark is affixed, reliance was placed on the following decisions :
1. AFCO Industrial & Chemicals Ltd. v. C.C.E., Pune – 1987 (32) E.L.T. 220 (T)
2. Collector of Central Excise v. Eastend Paper Industries Ltd. – 1989 (43) E.L.T. 201 (S.C.)
3. Tekno Valves v. Collector of Central Excise -1991 (56) E.L.T. 408 (T)
4. Union Carbide Ltd. v. Collector of Central Excise, Cakutta-II -1994 (74) E.L.T. 381 (T).
On the basis of these decisions it is now beyond doubt that Submersible Winding Wires manufactured by the appellant becomes marketable commodity only after its final packing and ISI mark affixed to it.
5. RG 1 register is not to be filled up as and when goods reach marketable stage. A day’s production is to be entered at the end of the day or before the beginning of the succeeding day of work. This position is well-established by the pronouncements of this Tribunal. Reference may be made to –
1. Snack Foods (P) Ltd. v. C.C.E., Chandigarh -1987 (31) E.L.T. 231(T)
2. Pratibha Silk Mills v. C.C.E., Vadodara -1989 (39) E.L.T. 118 (T)
3. Bihar Extrusion Co. (P) Ltd. v. CCE -1991 (56) E.L.T. 139 (T)
The view taken by the Tribunal in the above decisions is supported by Division Bench decision of Allahabad High Court in the case of Durga Rolling Mills v. Union of India and Ors. 1987 (29) E.L.T. 512 (All.).
6. Officers of the Excise Department inspected the appellants premises at 11 A.M. on 12-4-1996. They were in the factory till 9 P.M. in the night of 12-4-1996. In the Panchnama prepared by them, Submersible Winding Wires at various stages were seen in the factory. Some have reached the stage of marketability. The officers have not stated that they noticed any submersible winding wire which has reached final stage of packing when they visited. If that quantity which reached the final stage at 11 A.M. was such that it could have reached the final stage within two hours of the start of that working day, then the goods which reached final stage must be taken to have been manufactured on that day. The quantity manufactured on that day has to be entered in the R.G.I register at the end of the working day, namely, 12-4-1996. This aspect has not been correctly appreciated by the adjudicating authority or the appellate authority. There is no finding that at 11 A.M. when the officers entered the factory premises there were huge quantity of submersible winding wires which were in packed marketable condition. Therefore, I am not in a position to agree with the conclusion reached by the authorities below. Fortunately for the appellant the authorities have not found that there were clandestine movement of the goods by the appellant. Therefore, the seizure, redemption fine and the penalty imposed on the appellant are unsustainable. I set aside the same. Orders of the adjudicating authority and of the appellate authority are set aside in its entirety.
7. Appeal is allowed in the above terms.