2004 (1) TMI 115 - AT - Central Excise

Summary

Issues:
1. Confiscation of goods found in excess of statutory records in a 100% Export Oriented unit.
2. Imposition of penalty on the unit for excess goods found during verification.
3. Requirement of maintaining RG-1 register by a 100% EOU.
4. Discrepancy in accounting for two moulds during verification.

Analysis:
The case involved an appeal by the Revenue against the Order-in-Appeal passed by the Commissioner (Appeals) regarding a 100% Export Oriented unit where excess finished goods were found during a departmental visit. The Revenue contended that the excess goods found in comparison to the recorded balance in the statutory records were liable for confiscation and penalty. The adjudicating authority had ordered the confiscation of goods, imposition of a redemption fine, and a penalty on the unit. However, the appeal filed by the unit was allowed by the Commissioner (Appeals).

The Revenue argued that despite not being required to maintain an RG-1 register, a 100% EOU must maintain a daily stock register. They claimed that the excess goods found during verification were not liable for confiscation as they were not accurately recorded in the statutory records. Additionally, the Revenue pointed out a discrepancy where two moulds were initially unaccounted for during verification but were later found by the unit, indicating improper record maintenance.

On the other hand, the unit argued that as a 100% EOU, they were not obligated to maintain an RG-1 register. They relied on previous tribunal decisions to support their stance. Regarding the missing moulds, out of a total of 1698 moulds, only two were initially untraceable but were subsequently located by the unit, proving no shortage of moulds.

The Tribunal analyzed the legal requirements and exemptions applicable to 100% EOUs concerning the maintenance of the RG-1 register. It was noted that Rule 100H(3) under Chapter VA specifically exempted 100% EOUs from complying with Rules 47 and 53 related to excisable goods. Citing relevant precedents and circulars, the Tribunal affirmed that a 100% EOU was not mandated to maintain an RG-1 register. Consequently, the Tribunal found no fault in the Commissioner (Appeals) decision to set aside the confiscation and penalty. Moreover, as the missing moulds were later accounted for, the Tribunal dismissed the Revenue's contentions, ultimately dismissing the appeal.