Commissioner of Central Excise and Customs vs Resham Petrotech Ltd.

D.A. Mehta, J.—Appellant-Revenue has challenged order dated 9-7-2007 made by Customs Excise and Service Tax Appellate Tribunal, West Zonal Bench by proposing the following two questions:

(a) Whether in the facts and circumstances of the case, the Tribunal is justified in setting aside confiscation of goods, either finished goods or raw material on the ground that there was no justification for its confiscation since these goods were entered in their private records, but could not be entered in RG-1 Register?

(b) Whether in the facts and circumstances of the case, the Tribunal is justified in reducing the amount of penalty levied under Rule 25(1) of the Central Excise Rules, 2002 despite admission of the assessee as regards goods not being entered in statutory RG-1 register?

Heard learned Counsel for the appellant. It is submitted that when the Officers of Revenue visited the factory premises of respondent-manufacturing unit on 1-10-2004 certain stock of finished goods as well as raw material was found lying in the factory premises of the respondent. It is the case of the appellant that upon physical verification, excess stock of finished goods and raw material was found when compared with the statutory records maintained by the respondent. Accordingly an order came to be made after adjudication to confiscate the goods with an option to redeem the same upon payment of redemption fine. Personal penalty was also imposed upon the respondent-manufacturing Unit as well as the Production Engineer. While framing the order, the adjudicating authority disregarded the contention of the respondent that the finished goods could not be entered in RG-1 Register since last three days as the person concerned was on leave but the same had already been entered in the Production Register. The learned Counsel, therefore, submitted that a presumption arose that the excess stock was going to be removed clandestinely and sold without payment of excise duty, and this warranted confiscation, redemption fine in lieu thereof, and imposition of personal penalty on the manufacturing Unit and the Production Engineer. That the Tribunal had erred in holding that confiscation was not justified and in reducing the personal penalty on the manufacturing unit, and also deleting the penalty in toto insofar as the Production Engineer was concerned.

As can be seen from the impugned order of Tribunal and the record, the respondent has tendered explanation as to why the necessary entries were not made in the statutory records. The said explanation has not been disproved by any evidence to the contrary. The Tribunal has found that the explanation tendered is reasonable and does not warrant any confiscation of goods.

It is an accepted position that the liability to pay duty arises at the point of time when the goods are to be removed from the factory premises. Admittedly, the goods were found lying in the factory premises. Therefore the occasion to pay duty had not arisen. In other words, the liability to pay duty had not accrued in law. In the circumstances, it is not possible to accept the contention of the appellant that an inference should be drawn that the goods were to be clandestinely removed and hence confiscation was permissible. Such an inference should be possible if there are other surrounding or attendant circumstances. In the present case, no such evidence exists on record. The Tribunal was. therefore, justified in coming to the conclusion that the confiscation of goods was not justified.

It is also required to be noted that for the technical or venial breach of not entering the goods for three days in RG-1 Register, the Tribunal has sustained the penalty to the extent of Rs. 10,000/- in hands of manufacturing Unit. Therefore, on this count also no legal infirmity exists in the impugned order of Tribunal. Simultaneously, the Tribunal has deleted the penalty in hands of the Production Engineer. There is nothing on record to establish that it was the duty of the Production Engineer to make necessary entries in the statutory records. To the contrary the explanation of respondent that the person who was entrusted with the task of making entries in the statutory records was on leave has gone unchallenged. In the circumstances, the Tribunal rightly deleted the penalty levied on the Production Engineer.

The appeal is, therefore, dismissed in absence of any substantial question of law, as proposed or, otherwise.