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TMI Blog2023 (10) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 34 of Excise Act, 1944. Further, I order to appropriate the Bank Guarantee of Rs. 81,000/- (Rupees Eighty One Thousand Only) which was furnished by the noticee, against said redemption fine. (ii) I confirm demand of Rs. 5,263/- (Rupees Five Thousand Two Hundred and Sixty Three Only) on the shortages of finished goods on the party, under Section 11A of the Central Excise Act, 1944. (iii) I confirm the Interest, on demand confirmed above at (ii) above, at the applicable rates from the party, under Section 11AA of the Central Excise Act, 1944. (iv) I impose penalty of Rs. 3,28,465/- (Rupees Three Lacs Twenty Eight Thousand Four Hundred and Sixty Five Only) upon M/s Shree Shyam Pipes Ltd in terms of Rule 25 of Central Excise Rules, 2002 read with section 11AC of the Central Excise Act, 1944. (v) I order to confiscate the vehicle (truck bearing No HR 55P 4363) found to be carrying goods found in excess as per detailed discussed above. I impose redemption fine of Rs. 20,000/- (Rupees Twenty Thousand Only) upon M/s Hari Cargo Movers, Randhir Yadav Compound, Sihi Sikdapur, Kherki Daula, Gurgaon, in lieu of confiscation of aforesaid truck under Section 34 of Excise Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed demand in terms of provisions of Section 35F of the Central Excise Act. I find that appellant has now deposited 10% of demand at the time of filing of appeal before Tribunal. As such, I set aside the impugned order and remand the matter to Commissioner (Appeals) for decision on merits. 2. Appeal is thus allowed by way of remand." 2.4 Commissioner (Appeal) has vide the impugned order referred in para 1, dismissed the appeal. Aggrieved appellant have filed this appeal. 3.1 I have heard Shri D. K. Tyagi, Advocate for the appellant and Shri Sandeep Pandey, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned counsel submits that: ⮚ Shortage of 84.7 Kgs found on physical stock verification is due to human error in identifying the exact size of pipes since weighed in small quantity on a kanta of I MT capacity. The shortage of 84.7 kgs in available stock of 2530 Kgs cannot be on account of clandestine clearance. Reliance is placed on the decisions reported at [2015 (325) ELT 193 (T-Del)], [2015 (321) ELT 330 (T-Del)], [2015 (316) ELT 497 (T-Del)], [2013 (298) ELT 117 (T-Del)], [2015 (317) ELT 298 (T-Del)], [2011 (274) ELT 180 (ALL)]; & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the difference in stock in statements recorded on 28.05.2015 (v) the panchnama was not questioned at any point of time and (vi) the statements have not been retracted at any point of time. 5.3 Further, I observe that during search operation, the departmental officers have found that un-accounted goods are lying in the factory premises and the appellant is not maintaining any requisite records of purchase, production and sale of finished goods as well as raw material, shortage of finished goods and a truck loaded with scrap without documents. The search proceedings do not suffer from any infirmity, the statements are recorded in conformity with law and not retracted. The panchnama proceedings of search process were carried out in accordance with the relevant statutory provisions in the presence of independent witnesses. 5.4 Further, I find that the difference (shortages/ excess) in stock, recorded in the presence of the independent witnesses has been supported by the statement of the authorized signatory, who have accepted the discrepancy both shortage and excess, found in stock. Non recording of correct quantity of goods in the book of accounts maintained by the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to observe that the findings recorded by the Commissioner (Appeal) in the impugned order, to the effect that the appellants were not maintaining statutory records etc is contrary to the provisions of Rule 22 of Central Excise Rules, 2002 and the panchnama itself. Rule 22 of Central Excise Rules, 2002 provide as follows: "22. Access to a registered premises.- (1) An officer empowered by the Commissioner in this behalf shall have access to any premises registered under these rules for the purpose of carrying out any scrutiny, verification and checks as may be necessary to safeguard the interest of revenue. (2) Every assessee shall furnish to the officer empowered under sub-rule (1), a list in duplicate, of all the records prepared or maintained by the assessee for accounting of transactions in regard to receipt, purchase, manufacture, storage, sales or delivery of the goods including inputs and capital goods. ...." As per the above rule there are no separate statutory records prescribed under the Central Excise laws but the records maintained by the assessee in normal course of his business are considered as statutory for the purpose of Central Excise Law. Panchnama records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of stock of finished goods was done on the weigh bridge installed in the unit having capacity to weigh 1.00 MT. The stock position of Finished goods so obtained were compared with the Book Balance maintained by the party and is reflected in Annexure A to this Panchnama. On comparing the physical stock of finished goods as verified by the officers with the Book Balance i.e. RG 1 register maintained by the party certain differences (shortage/ excess) were noticed. Further while taking round of the factory and conducting the physical verification of the stock of finished goods a truck bearing Registration No HR 55 P 4363 was found inside the factory loaded with copper scrap. On being asked whether any document such as invoice/ challan has been prepared in respect of the goods loaded in the truck, Shri Sharma informed that no document has been prepared till the time of visit of the officers. On being asked about the quantity of copper scrap loaded in the said truck Shri Mohd Abdul informed that 5002.025 Kgs of Copper scrap has been loaded in the truck. He also produced the slips showing the weighment details which were prepared by him when the goods were being physically weight on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the records maintained by the appellant I do not find any justification in such observations which have been reproduced by the Commissioner (Appeal) in routine and stereotype manner without even examining even the panchnama. 4.4 Relevant extract of the Annexure A to Panchnama dated 12/13/05.2015 is reproduced below: Copper Pipe Quantity in Kgs Amount in Rs S.NO. Description Book Balance Physical Verified Difference Rate/ kg Value Duty 1 ¼"x23-24 SWG 220.20 220.20 0.0 0 0 2 ¼"x22 SWG 1.6 1.60 0.0 0 0 3 1/4" x 16-21 SWG 406.40 491.00 84.6 516 43654 5457 4 1/2" x 23-24 SWG 23.00 21.60 -1.4 511.03 -715 -89 5 ½" x 22 SWG 114.10 113.80 -0.3 506 -152 -19 6 ½" x 16-21 SWG 389.40 371.20 -18.2 481.03 -8755 -1094 7 3/8" x 23-24 SWG 0 51.00 51 500.84 25543 3193 8 3/8" x 22 SWG 0 0 0 0 0 9 3/8" x 16-21 SWG 143.30 131.20 -12.1 487.03 -5893 -737 10 5/8" x 23-24 SWG 62 62.00 0 0 0 11 5/8" x 22 SWG 0 0 0 0 0 12 5/8" x 16-21 SWG 0 20.60 20.6 487.03 10033 1254 13 3/4" x 16-26 SWG 212.00 413.00 201 487.03 97893 122 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it and conclusive evidence in respect of the clandestine clearance being alleged. Further the goods which were still in the factory premises of the appellant have not been cleared. Hence there cannot be any charge of clandestine clearance made against the appellant in respect of these goods. Officers could have asked the appellants to rectify their book balance and got them tallied with the physical stock determined by them. Similar view has been expressed in case of Koch Rajes C D Industries Pvt. Ltd. [2006 (193) E.L.T. 566 (T-Mum)] "3 (b) The law on confiscation of goods, in the factory and not entered in RG -1 production record is well settled. From the following decisions of the Bombay & Andhra Pradesh High Courts & of this Tribunal. (i) Southern Steels Ltd. v. U.O.I. - 1979 (4) E.L.T. (J 402) (A.P.) (ii) Kirloskar Brothers - 1988 (34) E.L.T. 30 (Bom.) (iii) Nalanda Tobacco - 1997 (91) E.L.T. 275 (A.P.) (iv) Bhilai Conductors Pvt. Ltd. - 2000 (125) E.L.T. 781 (Trib.) It is very clear that mere non-entry of the productions in the RG1 will not bring in the liability to confiscation under provision of the Central Excise Rules if there is no corresponding material of cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 263 (P & H)] held as follows: "2. Delhi-II v. M/s. Mico Glass Industries Private Limited [2010 (254) E.L.T. 254 (P & H)], wherein it has been held that the penalty would be leviable only on the goods, which were being clandestinely removed in a vehicle outside the factory premises and no penalty would be leviable on the goods, which were still lying in the factory premises and have not been removed and only shortage was detected in the stock verification." In case of Oudh Sugar Mills Ltd. [1978 (2) E.L.T. (J 172) (S.C.)] a constitutional bench of Hon'ble Supreme Court stated as follows: "14. The other finding that the registers were not properly maintained as required by Rule 83 is also an inferential finding based upon the calculations made by the Assistant Chemical Examiner. As we have already held those calculations being based upon unwarranted assumptions cannot form legal basis for a finding that more juice than what was recorded in the register had gone into the production of sugar." 4.6 Even in respect of the scrap, which was generated during the course of manufacture and was sent for recovery of metal to job workers for being further use in the process of manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the confiscation of goods was not justified." 10.2 Further, in the case of Commissioner of Central Excise, Chandigarh v. Sadashiv Ispat Ltd. [2010 (255) E.L.T. 349 (P & H)], cited by the appellant's advocate, the Hon'ble High Court of Punjab and Haryana held as under : "8. A perusal of the impugned order shows that no evidence has been produced by the Revenue that the respondent had cleared the goods unaccounted and the goods were kept for clandestine clearance. In the present case, even if the goods had not been entered in the RG-1 register, yet the same cannot lead to the conclusion that the goods were meant for clandestine removal. Both the Commissioner as well as the Tribunal have returned a concurrent finding of fact that there was no mens rea on part of the respondent to clandestinely remove the goods. 9. The appellant had formulated the following question of law for adjudication by this Court :- "Whether "mens rea" is a pre-condition for confiscation of unaccounted exciseable goods under Rule 173Q(a), (b), (c) of erstwhile Central Excise Rules, 1944 and present Rule 25(a), (b), (c) of Central Excise Rules, 2002?" 10. This question has squarely been answered by a D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods which were found in excess in the factory premises are not liable for confiscation and the adjudicating authority's order of dropping the issue under the show cause notice is correct and does not require any interference on this count." 11. In the light of the above settled law on the issue it is observed that in the present case also the goods were lying within the appellant's factory. There was no evidence on record to show that there was any attempt to remove those goods clandestinely without payment of duty. Appellant has given reasons as to why according to them the entries are required to be made in the statutory records only when goods are in a condition of finishing as available in the market. In view of the above decisions on the issue, we hold that the goods in question were not liable to confiscation under Rule 173Q of the erstwhile Central Excise Rules, 1944. Accordingly, we set aside the confiscation of the goods. 12. As regards the sixth issue of seizure of goods valued at Rs. 88,800/- in the factory of the appellant on 22-101997, we find that there was no intent to evade duty as the goods were covered by regular challans of Sab-Chem Division and the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Moreover, it is in record that the quantities lying in shed were assessed on pure guess work/eye estimate. Therefore, reliance in the case of CCE v. Steel Compels Ltd. - 2006 (197) E.L.T. 512 and other cases by the appellant is well founded in not accepting the shortages arrived at in the panchanama and in the Original Authority's order; when no shortage could be arrived at the question of its removal does not arise." Revenue in their Memo of Appeal have not advanced any valid reasons or evidence to contradict the above findings of the appellate authority. It is well settled law that mere shortages detected at the time of visit of the officers, that too which are being assailed as being incorrect, cannot be made the basis for upholding the activities of clandestine removal by the assessee. Revenue based upon such shortages is alleging that the same have been removed by the respondent in a clandestine manner without leading any evidence on record. Though both the authorities have relied upon number of decisions in support of their submissions, note can be taken off on the recent decision of Hon'ble Punjab & Haryana High Court in the case of CCE, Ludhiana v. Anand Foundaries and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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