Pfizer Limited Vs. Collector of Central Excise

1. This appeal is directed against the order of Collector of Central Excise, Chandigarh dated 21-2-1995 imposing a penalty on the appellants of Rs. 50,000/- 2. The short facts leading to the issue of this order are that the appellants were manufacturing a number of excisable products from certain common inputs. The rule prescribes a register to be maintained showing actual physical receipt of the inputs and their utilisation in specified final products in the form of RG 23A Part I register, where a number of inputs are required for making a number of final goods it became difficult for the assessee to maintain detailed records. The Trade Notice No. 43/86-C.E., dated 13-6-1986 issued by the Collectorate permitted the assessees to maintain combined accounts of the inputs. It was however required that the private records of the manufacturers should be able to reflect stock position at any time. It was further prescribed that in case where separate private accounts were being maintained, particulars of issue of inputs need not be entered in such register. The Appellants wrote to the jurisdictional Assistant Collector a letter dated 30-3-1988 informing him that they were maintaining stock accounts and were availing benefit of the impugned trade notice. They also claimed that such accounts were available for verification to the Central Excise Officers. A Show Cause was however issued on 2-7-1993 alleging that for failure to show utilisation of the inputs in the statutory register, the Modvat credit availed during the period December, 1992 to March, 1993 was liable to be disallowed and that the assessees were liable to penalty for such failure. The Collector in his impugned order accepted their pleas and dropped the demand proposed in the show cause notice. He however imposed a penalty of Rs. 50,000/- on the appellants giving rise to this appeal.

3. Before me the case was argued by Ms. Ginny Bedi, learned Counsel. In her submissions it was claimed that the Collector himself had accepted in his adjudication order the fact that the appellants had operated within the parameters of the impugned trade notice. She submitted that the Collector was satisfied that their private accounts reflected the position of the receipt, utilisation and stock of the inputs.

Therefore, there was not violation of the provisions of Rule 57G as held by him. She claimed that Collector's belief that statutory records were not properly maintained was not correct. She claimed that in the absence of mala fides on their part there was no justification for imposition of penalty.

4. Shri Ram Sharan, learned JDR argued that penalty was correctly imposed for failure of the appellants to maintain statutory records correctly.

5. I have carefully considered the submissions made by both sides and have also perused the relevant documents. The appellants were availing of procedural relaxation given in the impugned trade notice. The discussion made by the Collector shows that they had not defaulted in following the prescriptions of the trade notice. In Para 15 of the order the Collector held that since the noticees had been maintaining their own accounts, no fault could be found with reference to the availment of Modvat credit not withstanding the technical flaw in not reflecting daily entries in the RG-23A Part I. The Claim the appellants have correctly made is that the trade notice waived making of daily entries of inputs issued for the manufacture. On perusal of the Original Order it is clear that the Collector was satisfied that the assessees had written records as required in terms of trade notice.

Therefore, his action of penalising the appellant on the ground that the RG 23A Part I register was not written properly does not seem to be well founded. No other grounds for sustaining imposition of the penalty have been brought out in his order. Therefore his order imposing a high penalty does not sustain. In the result the order of the imposition of penalty is set aside and the appeal is allowed.