Judgment:
1. The officers of the department paid a visit to the factory of Jagdamba Textile Engineers, the respondent to this appeal, on 12.1.1993. They found that some quantity of final heaters stated to be component parts used in the manufacture of texturising machine and cooling plates were not entered in the RG1 register. A statement of Maheshbhai Shastri, Assistant Works Manager, was recorded on that date.
In that statement, he said that the goods had been manufactured during the previous week, but it was a custom of the assessee to enter the goods in the RG1 register only just prior to delivery of the goods to the customers and its customer Borasara Machines had not come forward when the goods have not been entered. Notice was issued to the appellant proposing confiscation of the goods under Rule 173Q and penalty on it. The notice also alleged contravention of the provisions of Rule 226. Adjudicating on the notice, the Deputy Commissioner confirmed the liability to confiscation of the goods which he permitted to be redeemed on payment of fine of Rs. 1,20,000/-. He has also imposed a penalty of Rs. 60,000/- under Rule 173Q.2. The assessee appealed this order. The Commissioner (Appeals) accepted the contention of the assessee, that there was no intent established of the assessee to clear the goods without payment of duty and that contravention being venial and technical. He therefore set aside the confiscation and penalty. The appeal by the department is against this order.
4. The counsel for the respondent's attempt to contend that the goods were only manufactured on the previous day and had been omitted to be entered in the RG1 register, because the plant excise clerk concerned fell ill on 12.1.1993, is unconvincing. Maheshbhai Shastri, in his statement, has clearly stated that the goods were manufactured in the previous week. Even if the clerk fell ill on 12.1.1993 - an explanation that is usually offered -mere is no explanation as to why the goods could not be entered on the previous night. I am therefore satisfied that Maheshbhai Shastri's statement narrates the true facts. Further the goods became liable to confiscation under Rule 226 for not having been entered in the RG1 register; although the provisions of Rule 173Q would not apply, because the goods having been removed from the factory and there nothing to establish that the assessee had deliberately not entered them in the RG1 register so as to facilitate their removal without payment of duty. If Shashtri had admitted that the goods were lying in the factory for at least for a week, they without being entered in the RG1 register, there is no reason why his claim in that statement that the goods were awaiting the customers should also not be accepted. In the absence of anything to show intent to evade duty, I am of the view that the contravention deserves some leniency. Further penalty imposed of Rs. 60,000/- on the assessee cannot be sustained and the penalty will have to be within the limit prescribed in Rule 226.
Having regard to the facts of this case I reduce the fine from Rs. 1,20,000/- to Rs. 25,000/- and the penalty to Rs. 2000/-.