Judgment:
1. Noting that the appeals are against the order dismissing for failure to deposit penalty, we take up the appeals with consent after waiving deposit.
2. The penalty that was required to be deposited was imposed on the appellant by the Deputy Commissioner for the reason that the appellant had not entered in its statutory records details of polyester yarn that it had dyed, some undyed yarn that was its raw material and yarn on receipt of which was covered by an invoice issued to Metro Textiles and Jayendra Dodhia, who is the appellant's director.
3. The goods have been confiscated under Rule 25 of the Central Excise Rules, 2001 and penalty imposed under Rule 26 of these rules. The alleged contravention took place in February, 2001, when these Rules have not been promulgated. The contravention therefore would be of the provisions of the Central Excise Rules, 1944 as it then existed.
Although it is to be noted that the provisions of Rule 173Q and Rule 25 and 26, we do not find prima facie applicable to the provisions of Rule 1A and B which corresponds to Rule 25 and 26. The appellant had not removed any goods, which were still in its factory and it is settled that this clause would only apply when the goods are actually removed.
Nor is it possible to say that the appellant had not accounted for these goods. In its decision in CCE v. Continental Chemicals - 2002 (140) E.L.T. 116, the Tribunal had interpreted the meaning of the term "account for" in Sub-rule (b) of Rule 173Q. It had explained that the phrase "accounting for" is not synonymous with the phrase "entered in the account". Accounting for anything means being answerable for or explaining a particular course of conduct." 4. In this situation, we are of the view that the Commissioner (Appeals) ought not to have insisted upon full deposit as he has done.
5. Accordingly we allow the appeals and set aside the impugned order.
The Commissioner (Appeals) shall hear and dispose of the appeals without insisting on any deposit.