ORDER
Gowri Shankar, Member (T)
1. This appeal is against the order of the Additional Collector of Central Excise. By his order, the Additional Collector has demanded duty on biris manufactured by the appellant, confiscated and imposed penalty on the appellant under the Central Excise Rules, 1944.
2. We have heard Shri Gopal Prasad, Advocate for the appellants and Shri P. Das.
3. The Additional Collector had found that the appellant contravened the provisions of Rule 51 of the Central Excise Rules by not putting serial numbers on the gunny bags in which bundles containing retail packets of biris were packed for removal. It is the Advocate’s contention that there are special provisions governing manufacture of tobacco in Rules 93 and 94. Further, he says, Rule 51 requires the serial number to be marked on every package when the goods are “made ready for removal from the factory”. According to him this stage had not been reached. As explained by the Advocate, the biris, after being packed, are subsequently made into larger packets containing 20 retail packets. These larger packets are in turn removed from the factory in the gunny bags. He says that the biris were not made ready for removal because while AR-I form, which is the assessment document, had been assessed but duty had not been paid. After payment of duty the Central Excise Officer is required to be present when the goods are removed and, to tally the goods to be removed with the particulars in the AR-I.
4. We are not able to accept the contention of the departmental representative. His emphasis upon the words “after any excisable goods are packed and weighed in the factory” in Rule 51 does not convince us. Rule 51 contemplates that markings should be put on the wholesale packet as soon as the goods have reached the stage of manufacture. The Rule contains the words “or otherwise made ready for removal from the factory”. Even going by his construction, it is debatable whether the word “package” in the Rule refers to retail packing. Since the goods are removed in wholesale packages, and it would be more reasonable to conclude that the word refers to wholesale packages. The goods are under physical control, which means that they could not be removed except in the presence of the Central Excise Officers. Therefore, even if there were no markings on the gunny bags, there would be no loss or danger to the Revenue, for the reason that the Central Excise Officer would refuse to permit clearance of wholesale packets which did not conform to the requirement of Rule 51. On this account we agree with the appellant.
5. The second major finding of the Collector is that 501 packets which were found in the store-room without markings on the wholesale packets had been substituted in place of unaccounted gunny bags containing biris which had been clandestinely removed. The basis for his conclusion is that there were no numbers on the gunny bags as already pointed out above. There is absolutely no evidence of clandestine removal. Here again, despite the Departmental representative’s strenuous arguments, we have to agree with the appellants.
6. The reason for imposition of penalty was also that there was some procedural contraventions such as failure to enter such biris in the RG-12B register, although it had already been entered in the RG-12A register; cuttings and over-writings in the RG-12 register, and a discrepancy between the opening balance and closing balance. The Advocate admits to these lapses, but points out that these were only procedural in nature and do not suggest intent to evade duty. Having regard to the nature and extent of the contraventions, we agree with him although since contravention of the Rules has taken place, penalty was imposable.
7. In the result, we set aside the confiscation and demand for duty and reduce the penalty imposed on the appellant to Rs. 1000/-.