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TMI Blog2019 (6) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... and transferred to Guindy unit, albeit on a notional value, and, at the time of clearance of complete machineries, they would pay the appropriate duty on the actual value, after adjusting the duty earlier paid by them. In respect of the impugned goods, such duty amount paid on provisional basis based on the notional value amounted to 16,42,425/-, which was, in any case, more than even the enhanced duty demand of 15,65,921.19/- proposed to be demanded in the corrigendum to the Show Cause Notice - there was nothing mala fide about the practice being followed by M/s. CMS. All the removals, though done only on delivery challans, had been reflected in their R.G. 1 returns. Though specific permission for such removals was not obtained, it cannot be denied that M/s. MOC had got their ground plan endorsed with a portion approved by the jurisdictional Range Superintendent for storing machineries. The appellants could very well have qualified for permission to store the finished goods outside their factory premises in terms of the amendment brought about in Rule 47 ibid with effect from 10.05.1989. At the most, there has been some procedural lapse in not having followed the correct protocol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finishing touches; some of them were received for repairs; (c) They cleared machineries only to their group companies and not to any outisders; (d) He furnished the ground plan of M/s. MOC with endorsement by the Range Officer, Range V-B as "Approved the portion marked 'A' for storing machineries"; (e) No documentation was done for storage of goods as there was an approval by the Superintendent in the ground plan of Guindy unit. M/s. CMS paid duty on the new machineries manufactured by them and stored at Guindy on the notional value and they would pay appropriate duty on the actual value at the time of clearance of complete machineries after adjusting the duty paid by them. 3. The Department took the view that the endorsement in the ground plan of Guindy unit by the Superintendent did not appear to show that permission was accorded to M/s. CMS to remove and store their non-duty paid goods at the premises of M/s. MOC; that the provisions of Rule 47 of the Central Excise Rules, 1944, as it stood at that time, did not contain any provision to permit such storage in a place outside the factory premises in which such goods were manufactured; that verification also revealed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that removal of the goods in dispute without payment of duty cannot be deemed to have taken place with the knowledge and permission of the Department and once again confirmed the demand of ₹ 15,12,454/- and adjusted the said demand from ₹ 16,42,425/- being the excise duty paid by M/s. CMS on provisional basis. The seized goods valued at ₹ 11,29,741/- were confiscated and redemption fine of ₹ 1.5 Lakhs was imposed in lieu of confiscation; the said fine was appropriated from an amount of ₹ 1.5 Lakhs already paid by M/s. CMS while taking possession of the said goods earlier. With regard to the other seized goods valued at ₹ 76,38,105/-, the adjudicating authority held that the goods are liable for confiscation under Rule 173Q ibid, but as the goods were released provisionally pending adjudication in terms of Rule 206(3) of the Central Excise Rules, 1944, he ordered appropriation of an amount of ₹ 12 Lakhs which was already recovered by encashing the Bank guarantee furnished by M/s. CMS. Penalty of ₹ 3 Lakhs under Rule 173Q ibid was imposed on M/s. CMS and penalty of ₹ 30,000/- under Rule 209A ibid was imposed on M/s. MOC. Hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscation is not sustainable and penalty is not imposable. (vi) The impugned goods were cleared from the appellant's Tiruvottiyur factory between 29.06.1990 and 20.02.1992. The impugned Show Cause Notice was issued only on 04.09.1992 and therefore, the demand of ₹ 14,16,079/- pertaining to the period from 29.06.1990 to 31.01.1992 is barred by limitation. Extended period of limitation is not invokable since no mala fide intention can be attributed on the appellant for the reasons stated supra. (vii) The remand order of the Tribunal required the adjudicating authority to decide whether M/s. CMS had mala fide intention or not based on the procedure followed by them, viz., entries being made in RG 1 and other accounts. The Ld. C.C.E., however, acted beyond the remand order and has held that M/s. CMS acted with mala fide intention on the ground that the Gate pass were not issued though the entries were made in the RG 1. Thus, while the remand order requires determination of the bona fide of M/s. CMS based on the procedure followed by them, the Ld. C.C.E. had concluded the intention of M/s. CMS based on the procedure not followed by them. Thus, the impugned Order-in-Original has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alamurugan supported the impugned order. He drew our attention to paragraph 3.26 of the impugned order wherein the adjudicating authority has analysed the endorsement of the Superintendent of Central Excise, Madras-V Division, Group B on the ground plan of M/s. MOC and has concluded that the endorsement simply meant that a portion was earmarked for the storing machineries. It does not in any manner state or imply that the portion was earmarked for storing of the machineries manufactured and to be cleared without payment of duty from M/s. CMS, Tiruvottiyur. No express permission was granted to M/s. CMS for removing excisable goods manufactured by them without payment of duty. 7.2 Further, at that point of time, there was no provision available in the Central Excise Law permitting such removal of excisable goods without payment of duty. Hence, the endorsement made in the ground plan cannot be taken as a permission given by the Department to remove the excisable goods by M/s. CMS without payment of duty to Guindy. Hence, the Department can rightly demand duty on excisable goods removed without payment of duty by M/s. CMS. 7.3 For these reasons, there is no infirmity in the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d if there has been any contravention of Rule 173Q it would be only contravention of Rule 173Q(1)(a) in the facts of this case. (c) We find that photocopies of R.G.1, which were produced before us, were part of the seized records and were available to the adjudicator to determine whether there was a mention to cover the present goods under seizure or otherwise of having been stored at Guindy and whether the Commissioner has considered this vital piece of evidence to prove the bona fide of the appellants is not known or coming out from the impugned order. We would therefore, find that this case to be a fit case to remand back to the adjudicator to go through the seized documents and to re-determine whether there was any mala fide intention on the part of the appellants to have violated the procedure and only thereafter to determine the penalty and in our opinion the penalty cannot be imposed on mere technical lapse or breach of Rule 173Q(1)(a). Therefore, it is essential that the matter needs to be re-considered in the light of the procedure which was followed by the appellants, inasmuch as they were entering the goods in R.G.1 and other accounts which has to be considered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sult of manufacturing process and have mobility and marketability and find place in the schedule to the Central Excise Tariff, they are excisable goods." 9.3.4 We are unable to appreciate such reasonings adopted by the adjudicating authority to hold that all the goods removed from the premises of M/s. CMS are excisable goods. Interestingly, even in paragraph 3.10 of the impugned order, the adjudicating authority has agreed that the following goods are semi-finished when cleared from M/s. CMS : S. NO. DESCRIPTION OF THE MACHINES JOBS COMPLETED AT THE TIME OF SEIZURE JOBS TO BE PERFORMED AFTER PROVISIONAL RELEASE 1 Candy Cup LH Candy Cup RH Basic machine with frame, cams punch & dies, blocks, Guide rails, Paper feed sub-assembly & Carrier feed sub-assebly. Approximately 90% completed. Drive unit for paper feed to be assembled; trials of paper feeding and blanking, installing of 24 volt DC probe for paper feeding & 24 Volt coil for solenoid valve; Inspection & painting touch up to be done; 2 ABE - 4 Nos Drive assembly tamper turret, mix turret & discharge turret sub assembly; tool spindles sub assembly; spindle drive sub assembly. Approximately 90% completed. Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such items removed from M/s. CMS due to constraint of space. 11.2 No doubt, this is surely not the proper procedure for obtaining permission to store such goods. The adjudicating authority has even taken the stand that the provisions of Rule 47 of the Central Excise Rules, 1944, as it stood at that time, did not contain any provision to permit such storage in a place outside the factory premises in which such goods were manufactured. However, as pointed out by the Tribunal in the earlier Final Order dated 16.10.2000, the amendment of Rule 47 ibid had been caused about with effect from 10.05.1989 whereby "the CBEC in exceptional circumstances having regard to the shortage of storage space at the premises of manufacturer where the goods are made, permit such a manufacturer to store his goods in any other space outside such premises without payment of duty." It is pointless to hypothesize at this point of time whether such permission would have been given by the CBEC if any such application had been made by the appellant. All the same, the ingredients which necessitated such amendment in Rule 47 ibid were very much present in the case of the appellant and it would be reasonable to e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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