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TMI Blog2015 (10) TMI 2141X X X X Extracts X X X X X X X X Extracts X X X X ..... th an intention to remove the same clandestinely and without payment of duty seized the finished goods as mentioned in Annexure-B. The statement given by Shri Neeraj Khattar is also in similar lines admitting the discovery of unaccounted finished goods and raw material. On such score, the contention of the appellant that there was no reasonable belief for confiscation is unacceptable. The instant case is not a situation where there is mere non-accountal of finished goods. If the finished goods were not accounted in the register, the appellant should be able to give a plausible explanation for such non-accounting. In Pepsi Foods Vs. CCE-Chandigarh, (2001 (11) TMI 118 - CEGAT, NEW DELHI), the non-accountal was sufficiently explained by the assessee. The Tribunal therein observed that Rule 173Q cannot take in an accounting failure simplicitor and held in favour of the assessee. Failure to account goods or raw material may be due to different reasons. There may be instances where the person incharge of accounts is on leave or change of management etc. which may be valid reason for not updating the register. In the present case, the appellant has not been able to give any explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. One lakh imposed on Shri Deepak Maini Partner of M/s. Sargodha Enterprise under the Central Excise Rules. The appellants filed appeal before the Commissioner (Appeals) who modified the order by setting aside the confiscation and redemption fine in regard to raw materials. The confiscation of finished products and imposition of redemption fine of One lakh in lieu of confiscation of t he same, and the penalty imposed upon the appellants were upheld. Aggrieved the appellants are before the Tribunal. 3. At the outset, it has to be stated that as the confiscation of raw materials was set aside by the Commissioner (Appeals) the issue in the instant case is with regard to confiscation of finished products and penalty imposed upon appellants under Central Excise Rules. It is also to be mentioned that t he case pertains only to confiscation of goods. No further investigation was conducted and there is no case of clandestine removal of goods. On behalf of the appellants, the arguments advanced by the learned counsel Shri Naveen Mallick can be summarized as under: i) The goods confiscated were not finished goods. It is the case of the appellants that as per Rule 10 of the Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rized as under: i) The goods confiscated were actually finished goods. The contention of the appellant that the goods confiscated were not finished and that they needed further painting and buffing is not supported by any evidence. The statement of Shri Deepak Maini, partner of M/s. Sargodha Enterprises which was taken on the spot did not mention any such process needed and this would prove that goods are finished goods. ii) The goods were confiscated on reasonable belief that the goods are liable for confiscation. At the time of search, the RG-I Register was updated only upto 28/2/2011. From 1/3/2011 to the date of serach, i.e., 10/3/2011, no entries were made in these registers. The lapse to update the register has been admitted by Shri Deepak Maini who is the partner and Shri Neeraj Khattar who was looking after the accounts. It is also admitted that the appellants have manufactured and cleared TV Cabinet in a routine manner from 1/3/2011 to 10/3/2011. But the relevant entries of production and clearance from 1.3.2011 to 10.3.2011 were not made in the RG-1 Register. Some Kaccha slips were recovered showing clearances from the factory against which invoices were not fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocess of manufacture explained by Shri Deepak Maini is that raw materials are put for heating and after heating they start moulding and then these are sent to print shop. After printing process, these are dispatched to parties. The process of manufacture as explained in their statements does not contain the process of painting and buffing. It is also to be mentioned that the submission made by the counsel that the statement of Shri Deepak Maini recorded on 26/8/2011 is not made part of RUD is correct. In the show cause notice as well as in order-in-original, there is discussion/mention about statement of Shri Deepak Maini recorded on 26/8/2011. The list of relied upon documents shows only three documents. RUD does not mention about statement of Shri Deepak Maini taken on 26/8/2011. On perusal of the order-in-original it shows that in the statement dated 26/8/2011, Shri Deepak Maini has only restated some facts which he has stated on 10/3/2011. It is clear that there is no particular fact stated by Shri Deepak Maini on 26/8/2011 which has led to the conclusion for confiscation of goods. Therefore, even if the statement taken on 26/8/2011 was not placed in the list of RUD as no relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh material to affirm a prima facie case for confiscation. Shri Deepak Maini in his statement has stated that the officers on the reasonable belief that the excisable goods have been manufactured and stored with an intention to remove the same clandestinely and without payment of duty seized the finished goods as mentioned in Annexure-B. The statement given by Shri Neeraj Khattar is also in similar lines admitting the discovery of unaccounted finished goods and raw material. On such score, the contention of the appellant that there was no reasonable belief for confiscation is unacceptable. 7. The next argument advanced on behalf of the appellant is that mere non-accounting of goods will not attract the provisions of Rule 25 for imposition of penalty. That the element of intention to evade payment of duty also has to be established. It is the case of appellant as there is no case for the department that the appellant removed the goods clandestinely, there is no intention to evade payment of duty. For better appreciation, Rule 25 of the Central Excise Rules, 2002 is noticed as under:- Rule 25. Confiscation and penalty. (1) Subject to the provisions of section 11AC of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finished goods were not accounted in the register, the appellant should be able to give a plausible explanation for such non-accounting. In Pepsi Foods Vs. CCE-Chandigarh, 2002(139) ELT 658 (Tri-Del), the non-accountal was sufficiently explained by the assessee. The Tribunal therein observed that Rule 173Q cannot take in an accounting failure simplicitor and held in favour of the assessee. Failure to account goods or raw material may be due to different reasons. There may be instances where the person incharge of accounts is on leave or change of management etc. which may be valid reason for not updating the register. In the present case, the appellant has not been able to give any explanation for not updating the Register. The only argument advanced is that the goods are not finished/excisable goods. As already discussed, the statements given on the date of search do not give any such explanation for not accounting the excess stock of finished goods and raw material found on the date of inspection. Further, entries of clearances of finished goods were found in loose papers. From the totality of facts and evidence presented by the case, the intention to evade payment of duty can be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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