ORDER
G.A. Brahma Deva, Member (J)
1. This appeal arises out of and is directed against the impugned Order-in-Appeal No. 217/2000 (H-I) CE, dtd. 21-11-2000 passed by the Commissioner of Customs & C. Excise (Appeals), Hyderabad.
2. When the matter was posted for final hearing, none appeared on behalf of the party. However there was a request for an adjournment. On going through the issue involved herein, I find that the matter itself can be disposed off on limited issue even in their absence. Accordingly, I proceed to pass this order after hearing Shri Munir Ahmed, JDR for Revenue.
3. Shri Munir Ahmed, JDR drew my attention to the finding portion of the impugned order which reads as under :-
“7. I do not find force in the submissions made by the appellants. I find that the appellants have not disputed the recovery of the excess stock of Calcium Carbonate or shortage of finished goods and other raw materials at the time of the visit of the Central Excise Officers to their factory on 25-3-98. The appellants have attributed these to the accounting lapses. Proper maintenance of the statutory records is very important requirement of the Central Excise law. The improper maintenance of the records invites penal provisions. Not only there was excess in the stock of Calcium Carbonate but there was glaring shortages in respect of finished goods and other raw materials also for which the appellants undertook to discharge the duty liability. The invoking of Rule 173Q ibid instead of Rule 226 ibid in the Show Cause Notice for confiscation of the excess stock of Calcium Carbonate does not vitiate the proceedings if the power exercised under Rule 226 ibid is conferred on the decision making authority, because the Rule No. or Section No. is not material so long as the power sought to be exercised is legally and validly exercised. Since the fact of non-accountal of the excess stock of Calcium Carbonate as well as the various other shortages of finished goods and other raw materials is not disputed, the contravention of Rule 226, apart from the provisions of various other Central Excise Rules, is established against the appellants and the excess goods found are liable to confiscation under Rule 226 ibid. Hence, the power exercised by the Deputy Commissioner in confiscating the impugned goods under Rule 226 ibid is in order. Penalty under Rule 173Q ibid has been imposed on the appellants not only because of the excess stock of unaccounted Calcium Carbonate found but also because of the removal without payment of 14,147.240 Kgs of PVC pipes (finished goods) valued at Rs. 4,11,786/- and various other raw materials as detailed above valued at Rs. 13,36,120/- which were found short. It is pertinent to note that the appellants undertook to discharge the duty liability on the shortage detected. Hence the imposition of penalty under Rule 173Q ibid is undoubtedly warranted and wholly justified. Keeping in view the facts and circumstances of the same, the imposition of redemption fine of Rs. 70,000/- in lieu of confiscation of Calcium Carbonate valued at Rs. 3,15,368/- and penalty of Rs. 50,000/- is in order. It does not warrant any interference. The impugned order passed by the Deputy Commissioner is sus-tainable”.
4. It was pleaded by the appellants that the present appeal restricts to the first Show Cause Notice issued for the excess stock of raw material. It was the contention of the party that the Calcium Carbonate which is nothing but burnt lime falling under Chapter sub-heading Nos. 2505.00. The excess quantity lying in their factory was originally entered in their books of accounts and not the cn.su of non-accountal. It was submitted that the impugned goods was not subjected to levy of duty at the factory of manufacture and no Modvat was taken on that. It was also submitted that no duty was demanded on Calcium Carbonate in the adjudication order. It was the plea of the party, the order relating to confiscation of Calcium Carbonate is not justifiable and furthermore no penalty can be imposed on that.
5. I have carefully considered the submissions made by both sides and perusal of records. As can be seen from the respective impugned orders that shortages of inputs as well as PVC Pipes (finished goods) valued at Rs. 4,11/786/- and in total value of Rs. 13,36,120/- were noticed by the authorities below. With reference to the excess stock of Calcium Carbonate valued at Rs. 3,15,368/-, the said Calcium Carbonate is neither dutiable and nor liable to confiscation as rightly pointed out by the party. In these circumstances, I am of the view that imposition of redemption fine as well as penalty must be restricted to the shortages of inputs namely PVC Pipes and other inputs other than Calcium Carbonate since the Calcium Carbonate is neither dutiable nor liable to confiscation since the very item was manufactured in the factory, I am of the view that quantum of redemption fine as well as penalty is required to be reduced accordingly. In the view I have taken, the redemption fine is reduced to Rs. 30,000/- as against Rs. 70,000/-and penalty is reduced to Rs. 10,000/- as against Rs. 50,000/-. But for this reduction, the impugned order passed by the Commissioner (Appeals) is otherwise upheld. Appeal is disposed of accordingly.