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TMI Blog1993 (10) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... the factory from 1-1-1980 to 23-5-1980 were resumed and scrutinised with varietywise clearances shown in the Bill-cum-gate passes and itemwise production figures shown in production register. On counting of itemwise stocks on 2nd and 3rd June, 1980 sub-tariff itemwise totals of stocks were not found agreeable with the recorded balance of RG 1 Register as struck on 23-5-1980. In respect of goods assessable at the rate of 20%, 25% and 35% ad valorem an excess of 978 doz. 11 pieces; 428 doz. 5 pieces and 62.5 Kgs. respectively were found which were kept concealed with other stocks of glass and glassware which could not be separated or sorted out from such other stocks of goods. In respect of goods assessable @ 5% ad valorem, a shortage of 674 doz. 8 pieces was detected in the total quantity as against the recorded balance in RG 1 register. Accordingly, the Central Excise Officers seized the entire stocks of excisable goods lying stored in the factory as per Panchanama dated 5-6-1980. Further scrutiny of the records indicated that 990 doz. 11 pieces were found short in respect of items assessable @ 25% ad valorem; a quantity of 2667 Kgs. of tubes valued at Rs. 17,338.75 were found shor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eas in fact these were Reagent bottles 1000 Ml. U.M.F.S. carrying 5% excise duty. Due to resemblance in shape and colour, Reagent Bottles had been mistaken for P.T. Bottles. The Collector who adjudicated the proceedings negatived the contentions of the party and held that party has contravened the provisions of Central Excise Act and Rules and, accordingly, he imposed penalty of Rs. 1,00,000/- on the appellant under Rule 173Q of the Central Excise Rules. Further he ordered for confiscation of 25625 Doz. 6 pieces and 5172.500 Kgs. of glass and glassware (tubes and rods) valued at Rs. 11,08,719.15 which were seized on 2/3-6-1980 under Rule 173Q of the Central Excise Rules. However, he gave an option to the party to redeem the goods on payment of redemption fine of Rs. 30,000/-. Since the seized goods have already been provisionally released, he appropriated the security deposit of Rs. 30,000/- towards redemption fine. He also demanded basic excise duty amounting to Rs. 51,373.44 Paise due on 1817 doz. 2 pcs. and 2667.500 Kgs. of glassware under erstwhile Rule 10 of the Central Excise Rules, 1944. The goods were removed other than as provided in the Rules. Aggrieved by this order, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The contention of the appellants on the second issue is that the verification done on 3-6-1980 was not final because a revised verification was done on 5-6-1980 and the excesses and shortages as found in the revised verification are to be taken into consideration. The only difference in the two statements dated 3-6-1980 and 5-6-1980 is about the laboratory-ware. In the statement dated 3-6-1980 laboratory-wares were found in excess as 315 dozen and 1 piece, while in the revised verification there was a shortage of 674 doz. and 8 pieces. When after extensive verification of stocks, excess stock had been identified varietywise and sizewise, the goods that should have been seized only those which were found in excess and whose number is given in the statement on page 77 of the paper book. 8. The contention of the Departmental Representative on this issue is that since the party has failed to maintain varietywise RG 1 and lotwise stock cards, it was not possible for the officers to locate varietywise actual shortage and excess, therefore, their entire stocks were seized by the Officers on a reasonable belief that the party had intentionally not accounted for the excess stock lying in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the imposition of fine and penalty by submitting that sufficient evidence was brought on record to show that the goods were found in excess and shortage and the same have been removed without payment of duty with an intention to evade duty. 12. We have carefully considered the arguments advanced on both sides and perused the records including the written submissions and detailed comments. On the first issue, we find that though the Department was right in observing that party was required to maintain varietywise accounts for the period in question, but since in view of the difficulties explained by the appellants from the beginning and with reference to their Representation, the Department also issued Trade Notice though it was at late but stating that a factory manufacturing more than 100 varieties/sizes of the glass and glassware may be exempted from separate entry in RG 1, we feel that redemption fine is not warranted unless it resulted in clandestine removal and that too it was proved positively. An regards second and third issues, we feel these issues require re-consideration. We find that there is a discrepancy between two verification reports dated 2/3-6-1980 and 5-6-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice allowing them to maintain a simplified account shows that there is some justification in the appellants submission that it was not practicable to maintain varietywise account. Also, so far as enforceability of the public notice from the date of issue is concerned, although strictly speaking, such notices are prospective in character but with reference to the context pointed out by the learned Counsel, this notice appears to be more of a clarificatory nature intended to regularise an on-going practice and allowing it to continue. In any eventuality, even if a stricter view is taken in the absence of any order or direction to maintain varietywise accounts, the Department could not legally insist upon it. All this, however, does not mean that the appellants were not required to maintain the accounts properly. It was their duty to maintain the stocks and accounts in such a fashion that it was possible to verify the correctness of their stock and accounts and it was possible to classify them sub-headingwise or rate of dutywise and determine correctly the quantity value, rate of duty and quantum of duty. 19. At the same time, once the Departmental Officers had chosen to verify t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture or clandestine removal with intent to evade duty and it was required to be shown from the facts and circumstances, whether such a charge would hold water in a given case. In any eventuality, even in a case of improper maintenance of stocks and accounts, a seizure could be effected only in respect of that quantity, which was not accounted for. And it was neither fair nor proper to seize and confiscate the entire stock indiscriminately. Again in so far as the question of value is concerned, if the Department felt that the value had not been correctly declared or recorded, it was open to it to verify the same with reference to vouchers or conduct a market enquiry but it was not open to the Collector to value the goods on an arbitrary basis. In any eventuality, when goods of hundreds of varieties of different values were involved, it was not fair or proper on the part of the officer to just take up the higher value items and assess the entire quantity on that basis. 24. In the instant case, the Departmental Representative has not been able to show from the order of the Collector or otherwise, of the correctness of the value and the quantum of duty and justify the amount dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntext that the goods which were seized had been released provisionally with a direction to account for in the RG 1 and clear them after payment of duty (and, therefore, the Collector has not demanded any duty on them). 28. I also observe that although the possibility of clandestine removal cannot be entirely discounted but one cannot be punished merely on suspicion and the benefit of doubt was in any case required to be given to the appellants. Similarly, no duty can be demanded without proper assessment except to the admitted extent. 29. At the same time, I take note of the fact that evidently, the stocks and accounts were not properly maintained strictly in accordance with the relevant provisions and rules and therefore, the appellants were liable to penalty on this score. Looking to the totality of the facts and circumstances, I feel that the penalty imposed is on the higher side, I, therefore reduce the same from Rs. 1 lakh to Rs. 25,000/- only . 30. It is ordered accordingly. 4-6-1993 Sd/- (S.K. Bhatnagar) Vice President 31. In view of the difference of opinion the matter is submitted to the Hon ble President for reference to a third Member on the following p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the documents had been furnished for the first time before the Tribunal and that no opportunity had been given to the appellant. There would be no difficulty in remand proceedings, as there is no question of physical verification of any stocks but the discrepancy in accounts was required to be checked. He pointed out from the order sheets in the case, that the previous DR had also agreed for remand of the case, as noted from the order sheet dated 4-6-1990. 35. I have carefully considered the pleas, perused the documents and the opinions expressed by ld. Member (J) and ld. Vice President. As can be seen from the records of these proceedings, this matter had been heard fully on 7-3-1988. During the course of hearing, it had been noticed that certain figures given at page 3 of show cause notice were not supported by any documents, which could show that there are excesses and shortages. Hence, DR had taken time to clarify the position as regards the conflicting figures that had emerged on the reading of the show cause notice and the various other documents available on record. After a protracted proceedings, the DR finally had agreed for remand of the matter on 4-6-1990. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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