1991 (6) TMI 125 - AT - Central Excise

Summary

Issues Involved:

1. Non-accountal of 6726 meters of wires and cables in the RG-1 Register.
2. Justification for the imposition of penalty.
3. Determination of the quantum of penalty.

Issue-wise Detailed Analysis:

1. Non-accountal of 6726 meters of wires and cables in the RG-1 Register:

The appellants were found to have 6726 meters of wires and cables, valued at Rs. 88,146.56, not accounted for in the RG-1 Register during a visit by Central Excise Officers on 11-9-1987. The Additional Collector adjudicated that these goods were liable for confiscation under Rule 173Q of the Central Excise Rules, 1944, and imposed a personal penalty of Rs. 20,000/-. The appellants argued that the non-accountal was due to the absence of the concerned person responsible for maintaining the register, and there was no intention to remove the goods without payment of duty. The Department countered that the explanation was not convincing, as the production register was maintained up to 9-9-1987, and no alternative arrangements were made in the absence of the concerned person.

2. Justification for the imposition of penalty:

The Tribunal found that the Department was justified in imposing a penalty for the lapse in not entering the goods in the RG-1 Register. It was held that "mens rea is not an essential ingredient for imposition of penalty under the Taxing Statute, where the party fails to fulfil the statutory obligations." However, the Tribunal took a lenient view considering the overall facts and circumstances, reducing the penalty from Rs. 20,000/- to Rs. 2,000/-. Contrarily, the Vice President disagreed, emphasizing that the explanation for non-accountal was not acceptable, as entries were missing for five days, not just two. Additionally, the Manager's inculpatory statement indicated an intention to remove goods without payment of duty, thus supporting the imposition of penalty.

3. Determination of the quantum of penalty:

The Vice President argued that the penalty should not be reduced, as the non-accountal was not a mere technical lapse but indicated negligence and mala fides. He emphasized that "mens rea is required to be shown," and the Department had succeeded in doing so. The Judicial Member, however, found that the penalty should be reduced to Rs. 2,000/-, considering the absence of the concerned person and the fact that the production register was maintained up to 9-9-1987. The third member, agreeing with the Judicial Member, concluded that the penalty should be reduced, considering the facts and circumstances and the contradictions in the Manager's statement.

Conclusion:

In view of the majority opinion, the personal penalty imposed on the appellant was reduced from Rs. 20,000/- to Rs. 2,000/-. The order of the Additional Collector was modified accordingly, and the appeal was disposed of with this modification.