Full Judgment
Mrs. Archana Wadhwa, J.
1. Being aggrieved with the order passed by Commissioner (Appeals), Revenue has filed the present appeal. I have heard Shri RK Mishra, Ld. Departmental Representative appearing for Revenue. Nobody appeared for the respondents.
2. As per facts on record, respondents are engaged in the manufacture of textile fabrics. Their factory was visited by the officers of DGCEI, who conducted search operations at their factory premises as also at their godown on 20.01.2004. Certain stock of finished fabrics totally valued at Rs.10,44,883/- (Rupees ten lakh forty four thousand eight hundred and eighty three only) was found in excess than the recorded balance. Similarly, the stock of P.C. suiting and PV suiting totally valued about Rs.4 lakh (Rupees four lakhs only) involving duty of Rs.40,848/- (Rupees forty thousand eight hundred and forty eight only) was found short. The respondents deposited the said duty on 30.01.2004.Similarly, at the godown, the officers detained the entire stock of finished goods and grey cloth for non-production of duty paying documents. However, on subsequent explanation being tendered by the respondents, their letter dated 07.04.2004, most of the stock was released and only the stock in respect of which the assessee could not produce the duty paying documents was converted into seizure, totally involving duty of Rs.1,35,784/- (Rupees one lakh thirty five thousand seven hundred and eighty four only).
3. On the above basis, proceedings were initiated against them for confiscation of the excess found seized goods in the factory as also in the godown; for confirmation of duty of Rs.40,848/- relatable to shortages detected in the factory; as also for imposition of penalties. The said Show Cause Notice converted into an order passed by the Asst. Commissioner, wherein he confiscated the goods seized from the factory as also from the godown and gave an option to the assessee to redeem the same on payment of redemption fine of Rs.6 lakhs (Rupees six lakhs only). He also confirmed duty of Rs.40,848/- in respect of shortages detected in the factory and of Rs.1,24,717/- (Rupees one lakh twenty four thousand seven hundred and seventeen only) to be paid by the assessee in case they exercise the option to redeem the goods. He imposed penalty of Rs.1.5 lakhs upon the respondents and penalty of Rs.1 lakh upon Shri Pawan Kumar Agarwal, Jt. MD of the respondents. This order was challenged before the Commissioner (Appeals). As regards confirmation of demand of duty of Rs.40,848/-, he upheld the same. However, as regards the excess found goods in the factory premises, he upheld the confiscation on the ground that mens-rea are not required for confiscation of goods under Rule 25(1)(b) of the Central Excise Rules, 2002. As regards the excess found goods in the godown and the duty involved therein, he observed that the assessee has been able to produce evidences to show that the said goods were cleared from the factory on payment of duty and were rejected by their buyers and hence kept in the godown. He also observed that the Revenue has not conducted any investigation at the end of the buyer and has wrongly shifted the burden of proof to the assessee to show that the same were not clandestinely removed, whereas, the onus is upon the revenue. As such, he set aside the confiscation of the goods seized from the godown.
In as much as, he had upheld the confiscation of the excess found goods in the factory but has set aside the confiscation of the goods seized from the godown, he reduced the redemption fine from Rs.6 lakhs to Rs.2 lakhs (Rupees two lakhs only) and also reduced the penalty on the respondents from Rs.1.5 lakhs to Rs.10,000/- (Rupees ten thousand only). Penalty imposed upon the Managing Director was, however, set aside.Hence the present appeal by the Revenue.
4. On going through the impugned order of Commissioner (Appeals), I find that he has granted relief to the respondents in respect of the goods found in the godown. Such relief stands granted by the appellate authority, after taking into consideration, the respondents plea that the goods found therein were earlier cleared on payment of duty under the cover of invoices as the same were rejected by their buyers, that were stored in the godown. He has rightly observed that the allegations of clandestine removal are required to be established by the Revenue and the negative onus cannot be placed upon the assessee. The Revenue has not made any investigations at the end of the buyers so as to find out the veracity of the truth in the contentions of the respondents. In the absence of any positive evidence to reflect upon the clandestinely cleared goods, the appellate authority has rightly concluded that the goods found in the godown cannot be confiscated and duty cannot be confirmed against the assessee. As such, he has rightly reduced the redemption fine to Rs.2 lakhs only relatable to the seizure in the factory. Similarly, penalty reduction of Rs.10,000/- for non-maintenance is also justified.5. In view of the above, I find no merits in the appeal filed by the Revenue and the same is accordingly rejected.