JUDGMENT
Archana Wadhwa
1. Vide the impugned order Commissioner of Central Excise, Calcutta has confirmed duty of Rs. 27,478/- (rupees twenty seven thousand four hundred seventy eight) against the appellant under the provisions of Rule 9(2) of Central Excise Rules, 1944 read with Section 11A(1) of Central Excise Act, 1944. Penalty of equivalent amount has been imposed under Rule 173Q read with Rule 226 of Central Excise Rules, 1944. The said demand of duty has been confirmed and penalty imposed on the findings of clandestine removal of the appellants’ final product. The said findings are based upon the entries made in the double set of production slips being maintained by the appellant. The said production slips were recovered from the almirah kept in the office premises during the course of visit of the central excise officers in the said factory. It is seen rom the records that the maintenance of two sets of production slips bearing same serial number and the same dates have not been denied by the appellants. On the contrary the appellants’ representatives, in their statements recorded during the course of post seizure investigations have clearly admitted the maintenance of two sets of production slips. The entries in the two sets of production slips are not same but the quantities shown to have been manufactured in the said slips differ. The slips showing the manufacture of lesser quantities have been entered in RG-1 register whereas the quantities shown in the second set of slips have not been entered. The adjudicating authority has observed that after the seizure of the said production slips, the onus shifter to the appellant to explain the maintenance and presence of the same in the appellants’ factory. The appellants have failed to give any cogent reasons for maintaining double sets of production slips. Ld. Commissioner has also found that the charges of clandestine removal are further corroborated by the fact that there was excess quantum of waste and scrap, generated during the course of manufacture of the final product, which was not recorded in RG-1 register.
2. The officers during the course of their visit also found 5.000 M.T. of waste and scrap totally valued at Rs. 34,000/- (rupees thirty four thousand), which was not entered in RG-1 records. The said scrap has been confiscated by the Commissioner with an option to the appellants to redeem the same on payment of redemption fine of Rs. 10,000/- (rupees ten thousand). In addition personal penalty of Rs. 5,000/- (rupees five thousand ) has also been imposed under Rule 173Q of Central Excise Rules.
3. I have heard Shri S.K. Roychowdhury, ld. adv. for the appellants and Shri D.K. Bhowmik, ld.JDR for the Revenue.
4. As regards the findings of clandestine removal are concerned, I do not find any force in the appellants’ submission that the second set was being maintained out of omission and inadvertent mistake. Admittedly the two sets of production slips carry the same serial number and the second set involving clandestine manufacture was located by the officers from the almirah of the office. The statements recorded during the course of investigation have also not disputed the said factum of presence of two sets of production slips. As such I find that there is enough material on record to conclude that the appellants have been indulging in clandestine manufacture and removal of their final product. Accordingly I uphold the order of the Commissioner confirming duty demand of Rs. 27,478/- (rupees twenty seven thousand four hundred seventy eight). However, keeping in view the facts and circumstances of the case I reduce the personal penalty from Rs. 27,478/- (rupees twenty seven thousand four hundred seventy eight) to Rs. 15,000/- (rupees fifteen thousand).
5. As regards the confiscation of the excess found waste and scrap, I find that the same has been confiscated under the provisions of Rule 173Q. The appellants have taken a stand that as per the practice in the industry, waste and scrap is entered in RG-1 only when the same is to be sold by the assessee. However, I find that the Mumbai Bench of the Tribunal in the case of CCE v. Continental Chemicals have held that the non-entered goods in the RG-1 register can be confiscated only under the provisions of Rule 226 and not under the provisions of Rule 173Q inasmuch as the expression ‘accounting for’ appearing in Rule 173Q is not synonimous with the phrase ‘entered in the account’ appearing in Rule 226. Inasmuch as in the instant case the proposal in the show cause notice for confiscation of the goods is under Rule 173Q and vide the impugned order the goods have actually been confiscated under Rule 173Q, without any reference to Rule 226, by applying the ratio of the above referred decision I set aside the confiscation. As regards penalty of Rs. 5,000/- (rupees five thousand) imposed under Rule 173Q. I find that the show cause notice proposes imposition of penalty under the said rule, as also under Rule 226, even though the same has been imposed under Rule 173Q. Inasmuch the appellants have admittedly not maintained the records properly by not entering the scrap in RG-1 register, penalty is imposable under Rule 226. However, maximum limit under the said rule for imposition of penalty in Rs. 2,000/- (rupees two thousand). Accordingly I reduce the penalty of Rs. 5,000/- (rupees five thousand) to Rs. 2,000/- (rupees two thousand). Appeal disposed of in above terms.
(Pronounced)