2001 (11) TMI 118 - AT - Central Excise

Summary

Issues Involved:
1. Non-entry of production in RG-I Register.
2. Applicability of Rule 173Q versus Rule 226.
3. Imposition of penalty and confiscation of goods.

Summary:

Non-entry of production in RG-I Register:
The appellant, a Limited Company manufacturing Potato Chips under the brand-name "Ruffles," was found to have not entered production data for the period 1-5-1997 to 8-5-1997 in the RG-I Register during a visit by Central Excise Officers on 9-3-1997. The officers seized the unentered stock and issued a show cause notice alleging violation of Rules 173Q and 226 of Central Excise Rules, proposing confiscation and penalty.

Applicability of Rule 173Q versus Rule 226:
The appellant argued that the non-entry was due to administrative issues, specifically the absence of the person responsible for maintaining the RG-I Register. They contended that there was no intent to evade duty as the production was recorded in their private records and Transfer Slips. They cited the Tribunal's decision in M/s. Bhillai Conductors (P) Ltd. v. CCE, Raipur, asserting that Rule 173Q requires mens rea, which was absent in this case. The Tribunal agreed, noting that Rule 173Q(b) pertains to failure to account for excisable goods with intent to evade duty, not mere accounting failures. The Tribunal emphasized that Rule 226, which deals with the correct and timely maintenance of records, was more applicable.

Imposition of penalty and confiscation of goods:
The Dy. Commissioner initially imposed a redemption fine of Rs. 5,09,255/- and a penalty of Rs. 5 Lakhs under Rule 173Q. The Commissioner (Appeals) upheld this decision, viewing the non-accountal as a gross violation. However, the Tribunal modified the penalties, reducing the penalty to Rs. 2000/- and the redemption fine to an equal amount, aligning with the provisions of Rule 226, which prescribes a penalty for such administrative lapses without intent to evade duty.

Conclusion:
The Tribunal concluded that the appellant's failure to enter production data in the RG-I Register was an administrative lapse without intent to evade duty, thus attracting Rule 226 rather than Rule 173Q. The penalties were accordingly reduced to Rs. 2000/- each for the penalty and redemption fine. The appeal was partially allowed.