1999 (12) TMI 204 - AT - Central Excise

Summary

Issues:
Violation of rules regarding maintenance of register; Confiscation of goods under Rule 173Q; Imposition of redemption fine and penalty; Interpretation of Rule 53 for maintaining RG 1 register; Marketability of goods under ISI standards; Applicability of previous court decisions on marketability.

Violation of Rules Regarding Maintenance of Register:
The case involved the violation of rules regarding the maintenance of the RG 1 register by a manufacturer of Submersible Winding Wires. The Excise Department initiated proceedings against the manufacturer for not entering the quantity of goods that reached the marketable stage in the register, leading to the confiscation of goods valued at Rs. 12,64,396 under Rule 173Q. Additionally, a penalty of Rs. 4 lacs was imposed for contravening Rule 53. The appellant contended that the goods were still in the manufacturing process and not marketable until ISI marking was affixed, supported by a permission document exempting daily entries in the register.

Confiscation of Goods under Rule 173Q:
The confiscated goods were allowed to be redeemed on payment of a fine of Rs. 5 lacs. The appellant argued that the goods were still undergoing testing and not yet marketable, as per the standards set by the Bureau of Indian Standard. The appellant relied on previous court decisions to support the claim that the wires only became marketable after final testing and ISI marking, thus challenging the confiscation and imposition of the redemption fine.

Imposition of Redemption Fine and Penalty:
The appellate authority dismissed the appeal against the confiscation and penalty imposed on the appellant. However, the appellant successfully argued that the goods were still in the manufacturing process and not ready for marketability until the ISI marking was affixed. As a result, the orders of the adjudicating authority and the appellate authority were set aside, leading to the appeal being allowed in favor of the appellant.

Interpretation of Rule 53 for Maintaining RG 1 Register:
The appellant contended that entries in the RG 1 register were not required when goods reached the marketable stage but should be made at the end of the day or early the next day. The appellant's factory operated on a specific timing schedule, and no marketable goods were produced on the day of the inspection. The appellant cited various court decisions and a permission document to support the argument that entries in the register were not necessary until the goods were fully tested and marked as per ISI standards.

Marketability of Goods under ISI Standards:
The appellant emphasized that Submersible Winding Wires had to undergo rigorous testing, including a 7-day air oven ageing test and a water immersion test with 3000 volts of electrical current. Only after these tests were completed, and ISI marking was affixed, could the wires be considered marketable. The appellant's factory did not have any marketable goods during the testing period, justifying the absence of entries in the RG 1 register as per Rule 53 and the exemption granted by the authorities.

Applicability of Previous Court Decisions on Marketability:
The appellant relied on previous court decisions to establish that Submersible Winding Wires only became marketable after final testing and ISI marking. The decisions highlighted that goods in the process of meeting ISI standards were not to be entered in the RG 1 register until they were ready for sale or removal from the factory. By referencing these decisions, the appellant successfully argued against the confiscation, redemption fine, and penalty imposed by the authorities, leading to the appeal being allowed in their favor.