2022 (6) TMI 375 - AT - Central Excise

Clandestine removal - Non-recording of production in RG-1 register while checking the physical stock by the officers - entire case made out on the basis of statement of Shri Jugal Kishore Munot, partner of the appellant firm and the physical stock taking conducted by the visiting officers - HELD THAT - In the physical stock taking, stock was not found accounted for in the RG-1 register. In this regard, the partner of the appellant firm, Shri Jugar Kishore Munot categorically stated that the production was not recorded because the concerned dealing staff was on leave. There is no rebuttal to his this statement by the department. The department has not produced any other evidence to establish that the said unaccounted goods were kept as there was a preparation for clandestine removal. Therefore, merely because the goods were not accounted and for which a plaisible explanation has been given by the partner of the firm, goods cannot be confiscated and no fine or penalty can be imposed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to order upholding confiscation of goods, redemption fine, and penalty for failure to record production in RG-1 register.

Analysis:
The appellant challenged an order upholding the confiscation of goods, redemption fine, and penalty due to an alleged offense of not recording production in their RG-1 register during a physical stock check. The case relied heavily on a statement by a partner of the appellant firm explaining that the production was not recorded because the dealing person was on leave. The appellant argued that there was no evidence to suggest the unaccounted goods were intended for clandestine clearance, thus contesting the confiscation and penalties imposed. The appellant cited several judgments supporting their position.

Department's Position:
The Revenue, represented by the Superintendent, contended that as per Rule 25(1)(b), unaccounted goods are liable for confiscation, with fines and penalties following. The Revenue relied on specific judgments to support their stance that confiscation and penalties were justified in such cases.

Judgment:
After considering both sides' arguments and examining the records, the Hon'ble Member found that the case was primarily built on the partner's statement and the physical stock check where unaccounted goods were found. The partner's explanation that the production was not recorded due to the dealing person's absence was not rebutted by the department. Since there was no evidence indicating the unaccounted goods were intended for clandestine removal, the confiscation and penalties were deemed unjustified. The judgments cited by the appellant aligned with their case, while those cited by the Revenue did not directly apply to the present circumstances. Consequently, the impugned order was set aside, and the appeal was allowed.