2011 (6) TMI 388 - AT - Central Excise

Ceramic Glazed Tiles - boxes of Tiles found in excess than the recorded balance in RG-1 register - Order of confiscation and penalty - Held that - There is no evidence of removal or attempt of removal of the finished goods without payment of duty or or any evidence to show that the said goods were meant for clandestine removal. It is a mere non-accountal of the finished goods produced in the Daily Stock Register. No evident establishment of malafide intention of the appellant. Confiscation or penalty is not called-for for non-maintenance of record inasmuch as excess production was reported to be of day of visit of the officers and was yet to be entered. It is not the case where the records were not being maintained by the assessee for quite long period. It is not necessary for a manufacturer to enter the production immediately and the same can be entered even at the end of the day. If the officers makes a visit in the meanwhile and found the goods having not been entered, in my view, no case can be made if the records are otherwise upto date. In the absence of any dispute in factual position, RG-1 register was fully maintained at the time of visit of the officers, non-entry of that day production in the record, by itself, could not result in confiscation of the same or in imposition of penalty - thus goods are not liable to confiscation, no penalty was imposable on the partner - Decided in favour of the assessee

Summary

Issues:
1. Confiscation of excess Ceramic Glazed Tiles found during inspection.
2. Imposition of penalties on the manufacturing unit and the partner.
3. Adjudication of the appeal against the order of confiscation and penalties.

Confiscation of Excess Goods:
The case involved the confiscation of 4,131 boxes of Ceramic Glazed Tiles found in excess during an inspection at the factory. The Commissioner(Appeals) set aside the confiscation order, noting that the excess stock was due to non-entry in the RG-1 register and not removal without duty payment. The judgment emphasized the absence of evidence of malafide intent or duty evasion, leading to the conclusion that confiscation was not justified. However, a penalty of Rs.10,000 was upheld for non-maintenance of the Daily Stock Register, as proper accounting was not done.

Imposition of Penalties:
Penalties of Rs.10,000 each were imposed on the manufacturing unit and a partner for non-maintenance of the RG-1 register. The Commissioner(Appeals) set aside the penalty on the partner, considering the lack of confiscation. The judgment highlighted that penalties can be imposed for non-maintenance of accounts, as per legal precedents. However, in the absence of malafide intent or evasion, confiscation solely due to non-accountal in the register was deemed unsustainable.

Adjudication of Appeal:
The judgment analyzed the factual position where excess production was reported on the day of inspection but not immediately entered into the records. It differentiated cases of prolonged non-maintenance of records from the present scenario, where the register was up to date. Emphasizing the absence of evidence for clandestine removal or raw material discrepancies, the judgment concluded that confiscation and penalties were unwarranted. The imposition of a penalty of Rs.10,000 was deemed unjustified. The penalty on the partner was rightfully set aside due to the lack of confiscation.

In conclusion, the appeal by the Revenue was rejected, and the respondent's cross objection was disposed of in light of the detailed analysis of the confiscation, penalties, and factual circumstances surrounding the case.