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TMI Blog2014 (6) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly put under seizure by way of a Panchnama dtd. 22.02.04. 4. Statement of Shri Lalji Dubey, Manager was recorded on the same date wherein he deposed that the records maintained by them in the shape of raw materials stocks register, PLA Cenvat register are not available in the factory. The respondent produced the said records subsequently for the provisional release of the goods after completing the records. Statement of the respondent's accountant Shri Raghunandan Aggarwal was recorded wherein he deposed that he is a part-time accountant of the unit and does not write the books of accounts regularly. The same are completed as and when he visits the factory. He accepted that the entries in RG-1 register were made subsequent to the seizure. Statement of Shri Manoj Kumar Jain, Director of the manufacturing unit was also recorded accepting the fact that it is Shri Lalji Dubey who is Manager and authorised signatory and looks after day-to-day activities. 5. On the above facts, proceedings were initiated against the respondent by way of issuance of Show Cause Notice dtd. 18.08.04 proposing confiscation of the seized goods, excess found raw material as also excess found goods totally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the present case in as much as no duty stands confirmed against the respondents on the case of short found raw material. In fact the allegations are that the raw material was not entered in the statutory records and as such was in excess than the balance reflected in the statutory records. As such we find no justifiable reasons for confiscation of seized excess found raw material. 8. As regards, the confiscation of the excess found final product, we find that Commissioner(Appeals) has referred to the provisions of Rule 25. Sub-rule (v) of Rule 25 provides for confiscation of the goods if the manufacturer does not 'account for' the excisable goods produced or manufactured or stored by him. The appellate authority by relying upon the Tribunal's decision in the case of Pepsi Foods reported in 2002 (139) ELT 658 (Tri.) has held that accounting for goods is different than non-recording in RG 1 register. Erstwhile Rule 173Q means explaining correct position of excisable goods as per law and 'non-accountal' would relate to not making correct entries in accounts books. By observing that there is no finding of any mensrea against the assessee so as to invoke sub-rule (d) of Rule 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said goods are part of the regularly manufactured goods by the respondents, the mere fact of their non-entry in RG 1 would not call for their confiscation. The Tribunal's decision in the case of Bhilai Conductors P. Ltd. referred (supra) makes it very clear that there need to be a malafide intention on the part of the manufacturer to clear the goods clandestinely. Such malafide intention has to be arrived at from the evidences collected by the Revenue. The mere fact of non-entry which can be on account of so many reasons, cannot be said to be an evidence reflecting upon the malafide intention of the assessee. No doubt the records are required to be maintained upto date and in the present case, the accountant of the manufacturing unit has clarified that he was not attending the factory regularly and was not making entries in the records regularly. However, such fact by itself, i.e., making of delayed entries in RG 1 register, cannot be adopted as ground for confiscation of goods or imposition of penalties on respondents. 11. In view of our fore going discussions, we find no justifiable reasons for interfering in the impugned orders. Revenue's appeal is accordingly, rejected. (Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k shall be duly authenticated by the producer or the manufacturer or his authorized agent. (3) All such records shall be preserved for a period of five years immediately after the financial year to which such record pertain. 16. This Rule is explicit enough to state that daily stock account need to be maintained on daily basis and not when a person engaged for writing the account pleases to do so. The register maintained for accounting the finished product is traditionally know as RG-1, though the statutory support for the form and name of the Register is discontinued. In this case such registers were not available in the factory and hence there is a clear contravention of rule 10 as above. 17. The next Rule to be considered is Rule 25 which reads as under: RULE 25 confiscation and penalty- (1) subject to the provisions of section 11AC of the Act, if any producer, manufacturer, registered person of a warehouse or a registered dealer- (a) removes any excisable goods in contravention of any of the provisions of these rules or the notifications issued under these rules; or (b) does not account for any excisable goods produced or manufactured or stored by him; or (c) engages in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that for imposing any penalty, mensrea has to be first proved is not correct. In the light of this decision there is no reason to presume that the expression 'intent to evade payment of duty' used in clause (d) is applicable to other clauses also. Such reading would imply that the requirement under Rule 9 of the Central Excise Rules that a manufacturer of excisable goods should register with Central Excise department also is rendered as having no conswqunce since the reasoning above should apply to clause (c) also. 19.2 In the case of acts specified in clauses (a) to (c) the acts are essentially of a nature which results in avoiding payment of duty. Hence these clauses are without reference to intention to evade payment of duty. The situation specified in clause (d) is more general in nature and deals with contraventions of any provisions of any provisions. Such contraventions those are classified into two. If the act is with intention to evade payment of duty provisions of Rule 25 (d) will apply. If it is without intention to evade payment of duty Rule 27 which prescribes penalty not exceeding Rs. 5000/- is prescribed. Other type of contraventions of Rules, a penalty which doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to see whether the omission to enter it in one of the registers is explainable. The reason given in this case that the persons writing account comes only once in a while and he writes account as and when he comes is not an explanation that can be accepted in this context. In my view, in this case the explanation given for such non-recording is not acceptable to satisfactorily account for the goods. 21. Reason why the conclusion at para 18(iii) is not correct 21.1 The definition of excisable goods as per section 2 (d) reads as under: (d) 'excisable goods' means goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as being subject to a duty of excise and includes salt; 21.2 In the above definition there is no exclusion for goods on which duty is paid. To this extent this definition is different from the definition of 'dutiable goods' in Customs Act. In my view the above definition includes raw materials which are excisable even if duty thereon is paid. If credit of such duty is paid the provision is applicable with a higher force. Clause (b) requires accounting of excisable goods 'stored'. In my view this word will apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for reference on questions of law involved in the case of Pepsi Foods Vs. CCE-2002 (139) ELT 658 (Tri. - Del.) relied upon by Member (Judicial). 26. I am of the view that the argument given in para 7 of the order of the Member (Judicial) for distinguishing the decision in the case of Patel Products also need to be seen in a slightly different perspective. It is true that in this case there is no demand of duty on raw materials found in excess. In fact such demand cannot be made in the hands of the appellant so long as they have not taken Cenvat credit and removed it without reversing the credit taken. But when both raw materials and finished goods are seen not recorded in accounts the intention for clandestine activity is obvious. Intention of a party is not something which can be seized and produced in a court. It is something to be inferred from the facts having regard to legal provisions. When goods are seized and released within the factory there is a liability to account the goods so seized and account goods manufactured from such material and clear it on payment of duty. 27. In my view the arguments recorded by Member (Judicial) converts excise levy into a scheme of volu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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