2014 (3) TMI 200 - AT - Central Excise

Confiscation of goods and penalty under Rule 25(1)(a) - Incomplete entry in RG-1 register - Held that - It is not denied that at the time of officers visit to the factory on 03/6/06, the RG-1 register was found written only upto 30th April, 2006 and the same was showing nil balance. It is also not denied that on the visit of the Central Excise officers they found that there was stock of 3961 kgs. of copper ingots representing 3 to 4 days production and the same had not been entered in the RG-1 register. There is thus contravention of the provisions of Rule 10 of the Central Excise Rules according to which every manufacturer has to maintain stock account of finished goods manufactured by him on daily basis in the RG-1 register. In view of this, the stock of copper ingots not accounted for in the RG-1 register has been correctly confiscated under Rule 25 (1) (a) of the Central Excise Rules and penalty has been correctly imposed on them under this Rule - Penalty reduced - Decided partly in favour of assessee.

Issues:
1. Confiscation of unaccounted stock of copper ingots.
2. Imposition of penalty under Rule 25 of the Central Excise Rules.
3. Non-entry of stock in the RG-1 register.
4. Appeal against the order of Assistant Commissioner.
5. Reduction of penalty imposed on the appellant company.

Confiscation of unaccounted stock of copper ingots:
The appellant, a manufacturer of copper ingots, faced confiscation of excess unaccounted stock of 3961 kgs of copper ingots found in their factory during a visit by Central Excise officers. The stock was not entered in the RG-1 register, leading to contravention of Rule 10 of the Central Excise Rules. The Assistant Commissioner initially ordered confiscation with an option for redemption on payment of a fine. Upon appeal, the Commissioner (Appeals) upheld this order. The Tribunal remanded the matter for denovo adjudication, where the Assistant Commissioner again ordered confiscation with a redemption fine of Rs. 1,20,000 and imposed a penalty of Rs. 1,96,379 under Rule 25 read with Section 11AC. The Tribunal, after considering the circumstances, upheld the confiscation but reduced the penalty to Rs. 50,000, thereby partly allowing the appeal.

Imposition of penalty under Rule 25 of the Central Excise Rules:
The appellant contested the imposition of a penalty of Rs. 1,96,379 in addition to the redemption fine, arguing that the non-entry of stock in the RG-1 register was not deliberate. The Counsel for the appellant pleaded that the penalty was too harsh given the circumstances, emphasizing that the stock discrepancy was due to non-availability of labor for weighing the ingots. The Jt. CDR defended the penalty, stating that the failure to account for finished goods in the register implied an intent to evade duty payment. The Tribunal acknowledged the contravention of Rule 10 but reduced the penalty to Rs. 50,000 considering the overall facts and circumstances of the case.

Non-entry of stock in the RG-1 register:
The Central Excise officers found that the RG-1 register was only written up to 30th April 2006 with a nil balance, while there was unaccounted stock of copper ingots in the factory during their visit on 3rd June 2006. This discrepancy led to the correct confiscation of the unaccounted stock under Rule 25 (1) (a) of the Central Excise Rules. The failure to maintain daily stock accounts of finished goods in the RG-1 register was a violation of Rule 10, justifying the confiscation and penalty imposed on the appellant.

Appeal against the order of Assistant Commissioner:
The appellant filed an appeal before the Tribunal challenging the orders of the Assistant Commissioner and the Commissioner (Appeals) regarding the confiscation of goods, imposition of penalty, and non-entry of stock in the register. The Tribunal, after thorough consideration, partly allowed the appeal by reducing the penalty imposed on the appellant company.

Reduction of penalty imposed on the appellant company:
After reviewing the submissions from both sides and examining the records, the Tribunal upheld the confiscation of the unaccounted stock of copper ingots and the imposition of a penalty under Rule 25. However, considering the overall circumstances, the penalty on the appellant company was reduced to Rs. 50,000, thereby partially allowing the appeal.

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