1976 (11) TMI 192 - AT - Central Excise

Issues Involved:
1. Failure to maintain up-to-date R.G.I. register.
2. Non-debiting of duty in Personal Ledger Account (P.L.A.) for cleared pumps.
3. Seizure and confiscation of unaccounted pumps.
4. Imposition of penalty and fine.

Detailed Analysis:

1. Failure to Maintain Up-to-Date R.G.I. Register:
The Department discovered that the appellants had not written up the R.G.I. register for the period from 1-9-1973 to 21-9-1973. During this period, 92 pumps were manufactured, and the appellants cleared 49 pumps for home consumption and 80 pumps for export without making relevant entries in the R.G.I. register. The appellants admitted to this lapse but claimed it was due to employee negligence and not an intention to evade duty. They argued that other records showed the production and clearances, and the contravention was detected from their records.

2. Non-Debiting of Duty in Personal Ledger Account (P.L.A.):
The appellants failed to debit the duty in their P.L.A. for 8 pumps cleared under gate passes. They argued that this was not intentional as they had sufficient credit balance in their P.L.A. to cover the duty. They maintained a running account of the balance on the reverse of the gate passes, which was later transferred to the P.L.A. They contended that the failure could have been easily detected by themselves or the Department.

3. Seizure and Confiscation of Unaccounted Pumps:
85 pumps, valued at Rs. 6,76,919/- involving duty of Rs. 67,691/90, which were not entered in the R.G.I. register, were seized by the Department. The appellants contended that the major portion of the production and clearance was meant for export, where duty was not involved. They argued that the confiscation of goods, plant, machinery, etc., and the deterrent penalty imposed were unwarranted in the absence of mens rea.

4. Imposition of Penalty and Fine:
The Collector imposed a penalty of Rs. 1,00,000/- under Rule 173-Q of the Central Excise Rules, 1944, and appropriated Rs. 18,276/- towards the value of the seized 85 pumps. A fine of Rs. 5,000/- was also imposed in lieu of confiscation of land, building, plant, machinery, material, and other things. The appellants argued that the principles of criminal jurisprudence and natural justice should apply, citing several judicial decisions that mens rea is relevant for action "IN PERSONAM."

Board's Findings:

On Facts:
The Board acknowledged that the basic facts were not disputed. The appellants had manufactured 92 pumps without entering them in the R.G.I. register, and 85 pumps were seized by the Department. The clearances of 49 pumps for home consumption and 80 pumps for export were also not entered in the R.G.I. register. The 8 pumps were cleared without debiting the duty in the P.L.A., but the appellants had sufficient balance to cover the duty.

On Legal Arguments:
The Board considered various judicial decisions cited by the appellants. It noted that Rule 173Q of the Central Excise Rules categorizes offences into four parts, with categories (a), (b), and (c) not requiring intent to evade duty, while category (d) does. The Board found that the cited judgments on mens rea were not directly applicable to the present case, as they primarily dealt with the burden of proof in smuggling cases.

The Board referred to the Supreme Court judgment in Hindustan Steel v. State of Orissa, which stated that penalty for failure to carry out a statutory obligation should not be imposed unless the party acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest. The Board concluded that neglect of duty could attract a penalty if the adjudicating officer deemed it necessary, even in the absence of mens rea.

Decision on Penalty and Fine:
The Board found that the penalty of Rs. 1,00,000/- was excessive. Considering the extenuating circumstances and the absence of clear intent to evade duty, the Board reduced the personal penalty to Rs. 10,000/-. The fine of Rs. 5,000/- in lieu of confiscation of the appellants' land, factory, etc., was set aside. The appeal was allowed to this extent, but the amount of Rs. 18,276/- appropriated in lieu of the value of the 85 pumps was upheld.

Conclusion:
The appeal was partially allowed, with the personal penalty reduced to Rs. 10,000/- and the fine of Rs. 5,000/- set aside. The appropriation of Rs. 18,276/- towards the value of the 85 seized pumps was upheld.

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