ORDER
Archana Wadhwa, Member (J)
1. Vide his impugned order, the Joint Commissioner of Central Excise & Customs, Surat confiscated 123 pcs of man made fabric recovered and seized from the appellants factory on the ground that the same was not entered in R.G.1 Register at the time of visit of Central Excise Officers, with an option to the appellant to redeem them on payment of fine of Rs. 70,000/-. In addition, duty of Rs. 1,68,030/- has been confirmed on the ground that the appellant had clandestinely removed 590 pcs of man made fabric. The above fact is based upon the scrutiny of lot register which was incomplete for the last two years, as also upon the statement of Shri Biren H. Vakharia, partner of the appellant company. Penalty of Rs. 2 lakhs has been imposed on M/s. Vakharia Traders and Rs. 25,000/- has been imposed on the second appellant Shri Biren H Vakharia, partner of M/s. Vakharia Traders under the provision of Rule 209A of Central Excise Rules, 1944.
2. Heard Shri M.N. Saiyed, Ld. Consultant appearing for the appellant and Shri Arun Chopra, Ld. JDR for the Revenue.
3. As per the facts on records the appellant’s factory was visited by the Central Excise Officers on 8.8.1998 who conducted various checks and on verification it was found that 123 pcs of processed man made fabric were not entered in the R.G.1 register on a reasonable belief that the same were meant for clandestine clearance, officers seized the said fabrics. Their records, maintained under Central Excise law were also seized and scrutiny of grey fabrics register revealed that entries of processed fabrics and clearance were not reflected for the last two years. On the above basis the Revenue concluded that the appellant had cleared the fabrics without payment of duty. Accordingly show cause notice was issued. The same was adjudicated by the Joint Commissioner in the above terms. Appeal against the same did not succeed before the Commissioner (Appeals). Hence the present appeal.
4. The appellant’s main contention is that apart from the fact that grey fabric register was not maintained, there is no other evidence to reflect upon the clandestine removal of the goods. He submits that if there was any intention on their part to process and clear the goods without reflecting the same in their statutory records, the appellant would not have made the receipt entries in the grey fabric register. It is their contention that for arriving at the finding of the clandestine removal, the onus is upon the Revenue to discharge the burden by production of some positive and tangible evidence. No other investigation has been made by the Revenue in the present case to support their charge of clandestine removal Referring to the statement of the partner, it has been clarified that he, interalia, admitted the panchnama and the fact of non-maintenance of grey fabric register but has nowhere given the details of clandestine removal. As such the statement cannot be considered as admission on the part of the partner. The Ld. Advocate’s submission is that at the most it is a case of improper maintenance of the records which can invite penal action under Rule 226 of Central Excise Rules, 1944 which prescribes a fine of Rs. 2000/-.
5. Shri. Arun Chopra, Ld. JDR countered the above arguments and has reiterated the reasoning of the authorities below.
6. After considering the submissions made by both the sides, I find that entire case of Revenue is based upon non-completion of grey fabric register maintained by the appellant. As contended by the Ld. Consultant, if the appellant was having any malafide intention to clear goods without payment, he would have not made entries of receipt of grey fabric in the register. The allegations of clandestine manufacture and removal of final product are required to be substantiated by production of some positive evidence, which is absent in the present case. Even the statement of the partner is not in the nature of any admission of having cleared the goods without payment of duty. As such I am in agreement with the appellant’s contention that demand of duty on this ground is not sustainable. As regards the confiscation of seized goods the appellant have taken a stand that the same was production of the day of the visit of the officers and has to be entered in the R.G.1 register at the end of the day. The above stand was taken in the very first statement before the Revenue. It is the contention of the Ld. Consultant that the fabrics in question are only half day’s production of the unit. The above stand has not been rebutted by the authorities. As such, I do not find any justification in confiscation of the goods.
7. As regards penalty on second appellants, I do not find any justification for imposition of the same inasmuch as the duty demand for clandestine removal has been set aside. However, I find that the appellant had not maintained proper entry in their grey fabric register which invite penal action under the provisions of Rule 226 of Central Excise Rules. Accordingly, I reduce the penalty to Rs. 2,000/- under the said section on M/s. Vakharia Traders. Penalty on Shri. Biren H. Vakharia is set aside in toto. The appeals are disposed of in above terms.
(Dictated in open Court)