1994 (8) TMI 145 - AT - Central Excise

Summary

Issues Involved:
1. Imposition of Penalty under Rule 173Q and Rule 226 of CER, 1944.
2. Confiscation of goods and recovery of duty under Section 11A of the Act.
3. Non-entry of goods in RG-1 Register.
4. Classification of LDPE Master Batches.
5. Seizure of goods within the factory.
6. Quantum of Penalty and Fine.

Detailed Analysis:

1. Imposition of Penalty under Rule 173Q and Rule 226 of CER, 1944:
The appeal arises from an order by the Collector of Central Excise, Vadodara, imposing a penalty under Rule 173Q and Rule 226 of CER, 1944. The appellants were accused of not maintaining their RG-1 Register up to date, resulting in a discrepancy between the gate pass book and the RG-1 Register. The Collector imposed a penalty of Rs. 5 lakhs under Rule 173Q(1) and ordered the recovery of Rs. 324/- for goods removed under GP. 1 No. 70 dated 13-5-1992 under Section 11A.

2. Confiscation of Goods and Recovery of Duty under Section 11A of the Act:
The Collector also ordered the confiscation of 8054.4 kgs. of LDPE Master Batches under Rule 173Q(1) of the Central Excise Rules, 1944, with an option to redeem the goods on payment of a fine of Rs. 2 lakhs. The appellants argued that the goods were not accounted for in the RG-1 Register due to a delay in weighing and packing, which they claimed was an irregularity rather than a contravention.

3. Non-entry of Goods in RG-1 Register:
The appellants contended that the non-entry of goods in the RG-1 Register was an irregularity and not a contravention, as Rule 53 did not specify a time limit for making entries. However, the Collector held that Rule 53 prescribed daily entries and that the non-entry of goods in the RG-1 Register was a contravention of the rules, justifying the imposition of penalties and confiscation.

4. Classification of LDPE Master Batches:
The appellants argued that LDPE Master Batches should be classified under Chapter 3204.19 and 3206.90, and that the classification dispute was pending before the Tribunal. The Collector, however, held that the classification list had been approved under Chapter Heading 3204.19 and 3206.90, and there was no dispute regarding the classification list or its approval at the relevant time.

5. Seizure of Goods within the Factory:
The appellants argued that the seizure of goods within the factory was bad in law, relying on previous rulings. The Collector, however, held that the facts of those cases were distinguishable and that Rule 173Q (1)(b) was directly attracted in the present case, justifying the seizure and confiscation of goods.

6. Quantum of Penalty and Fine:
The Tribunal found that the imposition of a Rs. 5 lakhs penalty and Rs. 2 lakhs redemption fine was not in consonance with the charge made out by the department. The Tribunal held that although there was a clear admission of non-entry and non-maintenance for a couple of days, the explanation provided by the appellants deserved scrutiny. The Tribunal reduced the penalty to Rs. 5,000/- and the fine to Rs. 2,000/-, citing the lack of evidence for suppression, mis-declaration, fraud, or intention to evade duty.

Conclusion:
The appeal was allowed in part, with the penalty reduced to Rs. 5,000/- and the fine to Rs. 2,000/-. The Tribunal upheld the confiscation of goods for non-entry in the RG-1 Register but took a lenient view on the quantum of penalty and fine, considering the absence of any intention to evade duty.