H and R Johnson (India) Ltd. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. the brief facts of the case are that on 22-1-1993 the central excise officers visited the factory of the appellants herein who are the manufacturers of wall tiles and floor tiles. they found that the statutory records such as rg-1 register were written upto 20-1-1993 and the production of the night shift of 20-1-1993 was transferred to the bsr whereas the production of the second shift was still lying in the finishing room. on 23-1-1993, fresh counting was started and the officers found that 14,460 boxes of different varieties of wall tiles were kept outside the temporary bsr which was in violation of rule 47 of the central excise rules, 1944. these tiles were, therefore, seized and handed over to the authorised signatories of the appellants for safe custody. the panchnama was also prepared. the statement of the authorised signatory was recorded in which he stated that seized boxes had been kept outside the temporary bsr without permission of the competent authority and that they had applied on 21-1-1993 for permission to store goods in temporary bsr. counting continued till 24-2-1993 and a final panchnama was prepared on 25-2-1993. the department found that there was an excess of 19,172 boxes of different varieties of tiles, and a shortage of 11,279 boxes of different varieties of tiles. a certain quantity of broken tiles was also found in the bsr. in these circumstances, a show cause notice was issued on 23-8-1993 proposing levy of duty on the 11,279 boxes of wall tiles manufactured and cleared without payment of duty, proposing confiscation of seized tiles and proposing imposition of penalty. the adjudicating authority held that 14,460 cartons of tiles seized on 24-1-1993 were liable to confiscation; however, since the goods were provisionally released, he ordered enforcement of bl bond for an amount of rs. 1 lakh. he also upheld the liability to confiscation of a quantity of 19019 cartons of tiles seized on 24/25-2-1993 and since these goods had already been provisionally released to the appellants, he ordered enforcement of bond and bank guarantee for rs. 3.2 lakhs. he confirmed the duty demand of rs. 3,91,924/- on 3026 cartons of tiles and also imposed a penalty of rs. 5 lakhs and levied interest under section 11ab of central excise act, 1944. hence this appeal.2. we have heard shri venkatraman, learned advocate and shri s.srivastava, learned departmental representative. we have perused the impugned order. the learned counsel has only contested the liability to confiscation of the goods found outside the temporary bsr namely the quantity of 14,460 cartons of tiles, contending that since the appellants applied for permission to store goods outside the bsr which permission was granted on 29-1-1993, the goods lying outside the temporary bsr should not have been held to liable to confiscation.however, as rightly pointed out by the learned department representative, the adjudicating authority has upheld the liability of these goods to confiscation for the reason that quantity represented approximately one month's production (the appellants production capacity is 3000 cartons per day) and that the appellants had not applied in time for any permission for storing goods outside temporary bsr. we also note that significantly, the date of application for permission is just one day prior to the date of visit of the central excise officers to the factory of the appellants. we, therefore, see no reason to interfere with this finding of commissioner.3. in the light of the above discussions, we uphold the impugned order but reduce the penalty to rs. 3.5 lakhs. subject to the above modification in the quantum of penalty, the impugned order is confirmed and the appeal is rejected.

Judgment:
1. The brief facts of the case are that on 22-1-1993 the Central Excise Officers visited the factory of the appellants herein who are the manufacturers of wall tiles and floor tiles. They found that the statutory records such as RG-1 Register were written upto 20-1-1993 and the production of the night shift of 20-1-1993 was transferred to the BSR whereas the production of the second shift was still lying in the finishing room. On 23-1-1993, fresh counting was started and the officers found that 14,460 boxes of different varieties of wall tiles were kept outside the temporary BSR which was in violation of Rule 47 of the Central Excise Rules, 1944. These tiles were, therefore, seized and handed over to the authorised signatories of the appellants for safe custody. The Panchnama was also prepared. The statement of the authorised signatory was recorded in which he stated that seized boxes had been kept outside the temporary BSR without permission of the competent authority and that they had applied on 21-1-1993 for permission to store goods in temporary BSR. Counting continued till 24-2-1993 and a final Panchnama was prepared on 25-2-1993. The department found that there was an excess of 19,172 boxes of different varieties of tiles, and a shortage of 11,279 boxes of different varieties of tiles. A certain quantity of broken tiles was also found in the BSR. In these circumstances, a show cause notice was issued on 23-8-1993 proposing levy of duty on the 11,279 boxes of wall tiles manufactured and cleared without payment of duty, proposing confiscation of seized tiles and proposing imposition of penalty. The adjudicating authority held that 14,460 cartons of tiles seized on 24-1-1993 were liable to confiscation; however, since the goods were provisionally released, he ordered enforcement of Bl Bond for an amount of Rs. 1 lakh. He also upheld the liability to confiscation of a quantity of 19019 cartons of tiles seized on 24/25-2-1993 and since these goods had already been provisionally released to the appellants, he ordered enforcement of Bond and Bank guarantee for Rs. 3.2 lakhs. He confirmed the duty demand of Rs. 3,91,924/- on 3026 cartons of tiles and also imposed a penalty of Rs. 5 lakhs and levied interest under Section 11AB of Central Excise Act, 1944. Hence this appeal.

2. We have heard Shri Venkatraman, learned Advocate and Shri S.Srivastava, learned Departmental Representative. We have perused the impugned order. The learned Counsel has only contested the liability to confiscation of the goods found outside the temporary BSR namely the quantity of 14,460 cartons of tiles, contending that since the appellants applied for permission to store goods outside the BSR which permission was granted on 29-1-1993, the goods lying outside the temporary BSR should not have been held to liable to confiscation.

However, as rightly pointed out by the learned Department Representative, the adjudicating authority has upheld the liability of these goods to confiscation for the reason that quantity represented approximately one month's production (the appellants production capacity is 3000 cartons per day) and that the appellants had not applied in time for any permission for storing goods outside temporary BSR. We also note that significantly, the date of application for permission is just one day prior to the date of visit of the Central Excise Officers to the factory of the appellants. We, therefore, see no reason to interfere with this finding of Commissioner.

3. In the light of the above discussions, we uphold the impugned order but reduce the penalty to Rs. 3.5 lakhs. Subject to the above modification in the quantum of penalty, the impugned order is confirmed and the appeal is rejected.