2015 (11) TMI 1555 - AT - Central Excise

Demand - duty alongwith interest redemption fine and equal penalty - unaccounted stock of impugned goods found, which was not accounted in the RG1 Register - appellant assessee is regularly paying excise duty on goods cleared - Held that - the appellant assessee is regularly paying the excise duty on the goods cleared by them. In the present case, the paper was in reel form and were waiting for order confirmation from the customers for cross cutting into printing and writing papers of required sizes so as to call it as finished goods. There was no attempt on their part to clear any goods without payment of duty. Therefore, by respectfully following the ratio laid down by the co-ordinate Bench of this Tribunal, it is found that the seized goods were not ready for removal from the factory but waiting for order confirmation from the customers. For non-maintenance of record, penalty under the provision of Rule 25 is imposable. Therefore, the penalty is reduced under the said provision on M/s. Aaditiya Aswin Paper Mills Pvt. Ltd. to ₹ 2,500/- and the redemption fine is waived. - Decided partly in favour of assessee

Summary

Issues:
- Appeal against order of Commissioner (Appeals) dated 14.08.2014 regarding unaccounted stock of goods, demand of duty, redemption fine, and penalties imposed.
- Failure to maintain RG1 register and excess physical stock.
- Intent to clear unaccounted goods without payment of duty.
- Arguments for waiver of penalties and redemption fine.
- Comparison with precedent case of Camex Intermediates Ltd.
- Decision on imposition of penalties and redemption fine.

Analysis:
1. The appellant, a paper manufacturer, appealed against the Commissioner (Appeals) order due to unaccounted stock of goods found during a physical verification by the department. The unaccounted stock was not recorded in the RG1 Register, leading to demands of duty, redemption fine, and penalties. The appellant also faced penalties for three upheld issues by the Commissioner (Appeals), prompting the appeal.

2. The appellant's counsel argued that the unaccounted goods were in a semi-finished stage awaiting final instructions from clients. They emphasized the company's regular compliance and payment of central excise duty, suggesting the omission of 22.815 MTs. of paper was unintentional. Referring to a precedent case, the counsel sought a waiver of the imposed penalties, claiming they were excessive.

3. On the contrary, the department contended that the appellant's failure to maintain the RG1 register was a violation of Rule 10(1) of the CER, 2002. They alleged deliberate intent to clear unaccounted goods without duty payment, justifying the imposed penalties under Rule 25(1)(b) and the redemption fine. The department urged upholding the Commissioner (Appeals) order.

4. After reviewing the arguments and evidence, the Tribunal noted the appellant's regular payment of excise duty and the nature of the goods awaiting final processing before clearance. Citing a precedent case, the Tribunal highlighted that the seized goods were not ready for removal but pending customer confirmation. Consequently, the Tribunal reduced the penalty imposed on the appellant under Rule 25 to Rs. 2,500 and waived the redemption fine, aligning with the precedent's decision.

5. By following the precedent's rationale, the Tribunal concluded that the penalties were excessive given the circumstances. The appellant's inadvertent omission in maintaining records did not indicate an intention to evade duty payment. Therefore, the penalties were reduced, and the redemption fine was waived, partially allowing the appeal in favor of the appellant.