Judgment:
1. The appellants are engaged in the manufacture of textile yarns.
Officers of Central Excise visited their factory at 10.00 AM on 3-12-98 and, on scrutiny of records, found that the appellants had issued two invoices No. 835 and No. 836 on 2-12-98, in which Central excise duty was shown to have been debited in the PLA and RG 23A, Part-II. The invoices were found to have been issued to M/s. Ambika Traders, Ludhiana. The goods cleared under the invoices were seized from the premises of M/s. Ambika Traders. The stock of final products available in the appellants' factory was also verified, whereupon the officers found a shortage of 20351 Kgs. of cotton yarn and 6840 Kgs. of polyester yarn. A statement of Sh. S. Tiwari, authorised signatory of the appellants, was recorded, wherein he answered the queries made by the officers. On the basis of the results of the investigation, the department issued a show-cause notice to the appellants as well as to M/s. Ambika Traders. The notice was contested. The jurisdictional Assistant Commissioner passed order :- (i) Confiscating the seized goods with option to the appellants to redeem the same on payment of a fine of Rs. 50,000/-, (ii) Confirming the duty on the goods covered by the invoices, which had been paid by the appellants by way of debit in PLA and RG 23A, Part-II, dated 2-12-98, (iv) Imposing a personal penalty of Rs. 1.2 lakhs on the appellants under Rule 173Q, (v) Imposing a personal penalty of Rs. 5000/- under Rule 209A on M/s. Ambika Traders.
In the appeal preferred by the appellants against the order of the adjudicating authority, the Commissioner (Appeals) vacated the penalty imposed on Ambika Traders but affirmed the redemption fine and penalty imposed on the appellants. Hence the present appeal.
2. Heard both sides. Ld. Advocate, Sh. K.K. Anand submits that the two invoices under reference were issued at 5.20 P.M. and 5.30 P.M. on 2-12-98 by the concerned employee, who, immediately thereafter, left the factory to catch the staff bus which was scheduled to depart at 5.30 P.M. In that hurry, he could not make the necessary entries relating to payment of duty on the goods in PLA and RG 23 A, Part-II.Before the entries could be made on the next day, the officers visited the factory and noted the omission. Ld. JDR, on the other hand, submits that the factory had reopened at 9.30 A.M. on 3-12-98 and the officers visited only after half an hour. The appellants could have very well made the necessary entries in PLA and RG 23 A, Part-II before the officers turned up. Yet another argument advanced by the counsel is that the facts and circumstances of the case did not indicate any intent to evade payment of duty on the part of the appellants inasmuch as the removal of the goods was duly borne on all statutory records, in this connection, he referred to the entries made in the inward gate register, the entries made in the transport documents and those made in the octroi documents. Counsel submits that it was not justifiable on the part of the lower authorities to take penal action against the appellants in the absence of finding of mala fides. Referring to the shortages of cotton and polyester yarns, ld. counsel submits that there was only a shortage of 3110 Kgs. of cotton yarn and a shortage of 90 Kgs. of polyester yarn and that the entire duty on these quantities was duly paid by the party. Counsel submits that the shortages had resulted from mis-reporting by the labourers concerned. Ld. JDR has contested this submission of the counsel also, by submitting that it was the duty of the appellants to ensure that the physical stock tallied with the recorded balance in RG1 as the party was working under the self-removal procedure.
3. Considered the submissions. Insofar as the clearance of excisable goods under the two invoices issued on 2-12-98 are concerned, it is not in dispute that those invoices were issued at the fag end of the day, i.e. at 5.20 P.M. and 5.30 P.M. The appellants on that day did not, or could not, make the necessary entries relating to payment of duty on the goods in PLA and RG 23 A, Part-II on the same day. The next day morning, the Central Excise officers visited their factory at 10.00 AM.The factory had commenced its operations at 9.30 AM. Apparently, the appellants did not make the entries between 9.30 AM and 10.00 AM. The authorised signatory of the appellants admitted in his statement that the factory had commenced working on 9.30 AM on 3-12-98. He also admitted the lapse of not having made the necessary entries in PLA and RG 23A, Part-II till 10.00 AM on 3-12-98, The entries were made, obviously, after the officers visit. The payment of duty on the goods cleared under the two invoices was made only when the debit entries were made. Till then the goods remained in the non-duty paid status.
This factual position is undisputed and indisputable. The lapse has been admitted by the appellants. In such circumstances, imposition of penalty is justifiable. However, a penalty of Rs. 1.2 lakhs under Rule 173Q is, in the aforesaid circumstances, high and exorbitant. In this context, the decision cited by ld. counsel appears to be opposite. In the cited case of Hawkins Cookers Ltd. v. CCE, Chandigarh-2001 (131) E.L.T. 98 (Tribunal) = 2001 (45) RLT 412, this Bench reduced an exorbitant penalty imposed by the departmental authorities under Rule 173Q to Rs. 5,000/-. That was a case where the seized goods were valued at over Rs. 6 lakhs. In the cited case also, excisable goods were removed under invoice without making any debit entry in PLA and the debit was made subsequently. The facts of the two cases are substantially similar. Therefore, following the reasoning by this Bench in the cited case of Hawkins Cookers. I reduce the penalty in the present case from Rs. 1.2 lakhs to Rs. 10,000/-. As regards the redemption fine, I have come across no finding in the order of the Commissioner (Appeals). The adjudicating authority imposed a fine of Rs. 50,000/-. The redemption fine is in lieu of confiscation and there is a direct nexus between confiscation and penalty' under Rule 173Q. I have already reduced the penalty from 1.2 lakhs to Rs. 10,000/-.
Proportionately, the redemption fine also will stand reduced and I reduce the same to Rs. 5,000/-. The appeal is allowed to this extent.