ORDER
D.C. Mandal, Member (T)
1. By the impugned order, the Additional Collector of Central Excise, Meerut, confiscated 310 bundles of writing and printing paper weighing 18,600 Kg and 1062 packets of writing and printing paper wrapped in wrapping paper weighing 5049 Kg., with a redemption fine of Rs. 10,000/- and he also imposed penalty of Rs. 10,000/- on the appellants under Rule 173Q of the Central Excise Rules, 1944. The aforesaid goods were seized by the Central Excise Officers on 1-11-1983 when they visited the factory on that day, as they found that the abovementioned goods were not entered in the R.G1 register. Being aggrieved by the impugned order, the appellants have filed the present appeal which is before me.
2. I have heard Shri S.S. Mehra, learned consultant for the appellants and Shri Shishir Kumar, learned SDR for the respondent.
3. Shri Mehra, has argued that the seized goods, namely, 310 bundles and 1062 packets paper, weighing 23649.5 Kg in all did not reach the stage of R.G.I and as such the same were not entered in the R.G.I Register. He has also submitted that in the Trade Notice No. 82/83 dated 27th September, 1983, issued by the Collector of Central Excise, Meerut, the R.G.I stage in respect of various commodities was laid down. Against Serial No. 32 of para 18 of the said Trade Notice, R.G.I point for paper and paper board (Tariff Item No. 17) was indicated. It was not mentioned against this item that Column No. 15 in the R.G.I Register should be filled up in respect of paper and paper board, whereas against Items No. 41 and 50 in the said trade notice, there was specific mention that Column No. 15 should be filled in.
4. In the written memorandum of appeal, the appellants have mentioned the same ground. It has further been stated therein that the seized goods were the production of 31-10-1983. Their factory runs in three shifts and according to their practice the production of a day is accounted for in R.G. 1 Register on the next day. It has also been pointed out that R.G. 1 Register was taken by their Clerk to the Central Excise Office at 7.30 a.m. on 1-11-83 and he came back with the register to the factory around 10.45 a.m.. Before entries could be made in the register on 1-11-1983, the Central Excise Officers visited the factory at about 11 a.m. and resumed the register.
5. During the hearing before me, the learned consultant has submitted that this is not a fit case for confiscation of the goods and imposition of redemption fine and penalty. According to him, a technical lapse on their part is involved, and as such, no confiscation or penalty should have been ordered. In support of his submission, he has cited this Tribunal’s Order No. 253/85-C dated 20-3-85 in appeal No. ED (SB)(T) 939/81-C (M/s. Kellner Pharmaceuticals Ltd. Kanpur v. Collector of Central Excise, Kanpur) and also the order passed in the case of Merck Spares, Delhi v. Collector of Central Excise & Customs, New Delhi, in appeal No. CD (DEL)(T) 7/79-NRB dated 31-3-83 reported in 1983 ELT 1261.
6. Learned S.D.R. has argued that the impact of Trade Notice No. 82/83 is very clear and it has very clearly indicated the principle to be followed in determining the R.G.I stage. According to paragraph 7 of this trade notice, both packed goods as well as loose goods are required to be entered in R.G.1 register. It has been laid down in paragraph 14 of the Trade Notice “that as soon as the excisable goods assume an identifiable form they should be entered in the RG 1 register. In respect of paper and paper board the R.G. 1 point has been clearly indicated at Serial No. 32 of paragraph 18 of the Trade Notice. 310 bundles of printing and writing paper was found in fully packed condition and nothing more was to be done. 1062 packets of printing and writing paper were also in complete unit packings. They were not entered in the R.G. 1 register deliberately for removing them without payment of duty.
7. After the learned S.D.R. has concluded his arguments, the learned consultant has stated that in the show cause notice there was no allegation about clandestine removal of these paper and in the adjudication order there is no such findings by the Adjudicating Officer. Since there was no deliberate omission to record the production in R.G. 1 register and there was no intention to remove the goods without payment of duty, the order of confiscation and penalty should be set-aside.
8. I have carefully considered the case records, the grounds of appeal and the submissions made on behalf of the appellants and respondent during hearing. I find that clear instructions were issued by the Collector of Central Excise, Meerut in the Trade Notice No. 82/83 dated 27-9-83, laying down the principle to be followed in determining the R.G. 1 point and he has also clearly laid down the R.G. 1 point in respect of various commodities specified in para 18 of the Trade Notice. For proper appreciation of the Trade Notice, it is desirable to re-produce paragraphs 7, 9, 14 & 15 of the Trade Notice, which are as follows :
“7. This account cobines the record RG 1 and E.B. 4 prescribed under Rules. Where assessees, on their own, desire to maintain RG 1 and E.B. 4 separately, they may do so and in such cases maintenance of the account under Self Removal Procedure as in Annexure ‘A’ will not be necessary. In case a combined R.G. 1 and E.B. 4 account is maintained, the closing balance of the excisable goods in the record needs to be split up for accountal of goods in the finishing room and in the bonded store room. The loose stock lying temporarily in the finishing room awaiting removal to the bonded store room should also be entered in the relevant column of R.G. 1 register.”
“9. R.G. 1 account is to be maintained to show both the quantity in packed condition as well as in loose condition. All excisable goods even if lying in loose condition in the finishing room should be entered in the R.G. 1 register. As a rule all packed goods should be sent for storage in the store room provided under Rule 47′, if for any reason, the packed goods are to lie temporarily in the finishing room, prior permission may be obtained from the jurisdictional Range Superintendent in order to store the packed goods in the finishing room.”
“14. Broadly speaking, as soon as excisable goods come into existence in an identifiable form, irrespective of goods being subjected to quality control or other tests, they should be immediately accounted for in the R.G. 1 register. It is sufficient if the process of manufacture has resulted in bringing into existence an article as one mentioned in the Central Excise Tariff even if the goods may not be saleable in that form. As such, goods even if awaiting certain minor finishing process (es) and are even in loose condition, they should be recorded in the R.G. 1 register. It is not necessary that the goods should be in packed condition for entry in the R.G. 1 register.”
“15. The plea taken by the manufacturers that the goods have not been entered in the R.G. 1 register as they were awaiting certain quality control tests or affixing of lables etc. is not tenable and will not hold ground. It is emphasised that as soon as goods have assumed identifiable form and satisfies the description as mentioned in the Central Excise Tariff, their accountal in R.G. 1 register should not be postponed on any ground.”
These paragraphs clearly lay down the principle to be followed in determining the R.G. 1 stage in respect of various commodities. As stated therein, it is sufficient for the purpose of R.G. 1 if the process of manufacture has resulted in bringing into existence an article as one mentioned in the Central Excise Tariff even if the goods may not be saleable in that form and even if the goods may be awaiting certain minor finishing process (es) and are in loose condition. In paragraph 18 of the Trade Notice, R.G. 1 point in respect of various commodities has been specifically laid down. “Paper and Paper Board” falling under Item 17 of the Central Excise Tariff appear at Serial No. 32 of paragraph 18. The same is also reproduced below :
“(32). Paper and Paper Board (T.I. No. 17)
Paper and Paper Board should be treated as manufactured for purposes of R.G. 1 when they come out of the finishing room after completion of all the necessary processes duly packed in unit packings as are normally used for marketing paper and paper board.”
9. The impugned order shows that 310 bundles of writing and printing paper weighing 18,600 Kg. were duly packed in the ream form as well as gunny bundles. It also shows that 1062 packets of writing and printing paper were packed in reams wrapped in wrapping paper. It is clear that the impugned goods were duly packed in unit packing as are normally used for marketing printing and writing paper. It has been laid down in paragraphs 7 and 9 of the aforesaid Trade Notice that the goods, even if they are lying in loose condition, should be entered in the relevant column of R.G. 1 register: Column 15 of the prescribed R.G. 1 register also indicates that goods lying in loose condition in the finishing room should be accounted for in that column. I, therefore, hold that there was no scope for any doubt that the impugned goods reached the R.G. 1 stage and they should have been duly entered in the R.G. 1 register. There has, therefore, been a contravention of Rule 53 read with Rule 173G of the Central Excise Rules, as held by the adjudicating officer.
10. In the written memorandum of appeal, the appellants have stated that the seized goods were the production of 31-10-83 and according to their practice the production of that day was to be accounted for in the R.G. 1 register on 1-11-1983 and since the register was taken by the concerned clerk at 7.30 a.m. to the Central Excise Office, postings in the register could not be started in the morning of 1-11-83. They have also stated that their factory works in three shifts, and therefore, the production of 31-10-83 could be accounted for in the R.G. 1 register only on 1-11-83. But the appellants have not explained as to why the production of even the 1st shift of 31-10-83 was not accounted for in the R.G. 1 register. While there may be practical difficulty of making enterics in respect of the production of night shift on the same day, their failure to account for the production of the day time in the R.G. 1 register has not been explained.
11. In view of the forgoing discussions, I am to hold that there has been contravention of Rule 53 read with Rule 173G of the Central Excise Rules, 1944 particularly in respect of the goods produced during the day time on 31-10-83. R.G. 1 register is a very important Central Excise record and it is intended to prevent clandestine removal of excisable goods without making any entry therein. It has been provided in Rule 53 of the Central Excise Rules that this account should be maintained daily. The assessee should not, therefore, postpone the entries in this register to a later date. If there is any practical difficulty in accounting for day’s production on the same day, steps are required to be taken to remove the difficulty. Rule 173Q(1)(b) lays down that if any manufacturer does not account for any excisable goods manufactured, produced or stored by him, the goods shall be liable to confiscation and the manufacturer shall be liable to penalty. The order of the Additional Collector to confiscate the goods was, therefore, legally valid. It has, however, not been brought out either in the show cause notice or in the order-in-original that the non-accountal of the seized goods in the Central Excise records was with the intention to clandestinely remove the goods from the factory without payment of duty. In view of this, the end of justice could be met by imposing a smaller amount of redemption fine. For the same reason, I also hold that no penalty should be imposed for the aforesaid lapses. In the circumstances, having regard to the facts and circumstances of the case, 1 confirm the order of confiscation of the impugned goods, but reduce the amount of redemption fine from Rs. 10,000/- to Rs. 5,000/- only. I also set aside the penalty.
12. The appeal is partly allowed in the above terms.