M/S Jodhpur Supply Co. 3. Sh. Tarun Vs. Cce Delhi Iii - Court Judgment

Excerpt:
1. the issue involved in these four appeals, arising out of a common order passed by the commissioner, central excise, delhi iii is whether the nylonfabrie bags bearing brand name "reebok" valued at rs. 2,41,72/- seized from tempo on 10-9-1997, nylon/canvas bags bearing brand name "reebok" and "levis" valued at rs. 1,44,548 seized from the factory premises of m/s jodhpur supply co. on 10-9-1997, bags bearing name "reebok" valued at rs. 4,78,354 seized from the premises of m/s reebok india co. and leather pad, diaries wallets valued at rs. 28,92,570.94 p. seized from the premises of m/s crew b o.s.products p.ltd on 10-9-1997 are liable to confiscation under rule 173 q of the central excise rules and whether penalty is imposable on all the appellants.2.1 shri r. k. kapoor, ld. advocate for appellants m/s jodhpur supply company, m/s crew b.o.s. products pvt. ltd and shri tarun oberoi, submitted that the main case of the revenue against appellant no. 1 related to demand of duty of excise amounting to rs. 12,74,238 in respect of the goods manufactured and cleared by them for supply to m/s reebok india company and m/s levis strauss india pvt. ltd under the brand names of "reebok" and "levis"; that the said case has been got settled by m/s jodhpur supply company under the kar vivad samadhan scheme; that the present matters pertain to the confication of seized goods and imposition of penalty. the ld. advocate, further, submitted that the entries in r.g.i. register could not be made after 28-6-1997 as the employee who was assigned that work was on medical leave; that documentary evidence about illness was submitted to the department; that department has not alleged unauthorised removal of the goods which were lying in the factory ; that the lapse was of technical nature; that all the issues regarding non registration of the premises and non maintaining of r.g.i. had been settled under k.v.s. scheme and accordingly, these points should not have been raised again; that the appellant no 1 had a registration certificate from the department for the old premises; that they had shifted to the new premises in june, 1997; that they did inform the sales tax department about change of premises and, therefore, the allegation that the unit had not got the new premises registered does not have much force; that they were approaching the range officers for registration but for want of rent agreement central excise department did not register them in respect of new premises; that the allegation to the effect that they had not filed classification declaration under rule 173 b of the central excise rules is not correct as the show cause notice dt. 4-3-98 makes a mention of the declaration (page 4 of the notice.) 2.2 the ld.advocate also mentioned that the appellants were under the bonafide belief that they were not manufacaturing any branded goods for the reason that they were not engaged in manufacturing of any core product of reebok and levis and some goods were only for promotional purposes; that no objection was also raised by the department on r.t.12 returns submitted by them. he relied upon the decision in automobiles ltd. vs. cce. 1993 (67) 147 (t); associated cememnt cos ltd. vs. c.c.e. 1992 (57) elt 178 (t) and mac lab vs. c.c.e.1985 (19) elt 307. he further contended that provisions of rule 52a were also not violated as the goods were cleared under bill and challan; that the goods were not removed clandestinely; that raw material register was duly maintained, that therefore, non accountal of goods in r.g.i on account of sickness of store keeper will not warrant imposition of any penalty or a minimal penalty will be sufficient. reliance was placed on the decision in the case of electra (india) ltd. vs. cce., meerut, 1987 (30) elt 817 (t).2.3 the ld. advocate also contended that as the goods in factory had not been inspected the same were not fit to be entered into rg i register. reliance was placed on the decision in uptron powertronics ltd., vs.c.c.e., 1991 (56) elt 245. he also relied upon the following decisions in support of his contention that the goods lying in factory cannot be confiscated under rule 173q in absence of any intention to remove the same clandestinely and penalty also not be imposed under rule 173q.3. in respect of good seized from the factory premises of m/s crew b.o.s.products pvt. ltd, the ld. advocate submitted that all the goods were meant for export and not for sale in india; that even this fact is confirmed by the show-cause-notice as it is mentioned therein that "subsequenst investigation of records revealed that no domestic sale was effected from m/s crew b.o.s. products and all the goods being manufactured in the said m/s crew b.o.s.products are meant for export;" that after the provisional release of the seized goods, the same were exported; that accordingly question of removal of goods without payment of duty does not arise as the goods were meant for export; that there was no less of revenue to the government as goods had been finally exported. he also referred to board's circular f. no. 212/46/96-cx dt.20-5-1996 wherein it was mentioned that units may be asked to maintain a simple record of production and clearance and contended that entries are to be made only when production and clearance both take place. he also submitted that the circulars are binding on officers as held by the supreme court in the case of ranadey mironutrients ltd. vs. c.c.e.1996(87) elt 19 (s.c.). he also relied upon the decision in the case of alpha garments vs. c.c.e., new delhi,1996 (86) elt 600(t) wherein the goods were exported without maintaining proper records and without issuing gate passes, the tribunal reduced the penalty. he also mentioned that crew b.o.s. products pvt. ltd, being co-noticee of jodhpur supply company which had settled the matter under k.v.s.scheme, no penalty can be imposed on them as per ministry's order dt. 8-12-1998 as reported in 1999 (80) ecr 8c.4. the ld. advocate finally arguing against the imposition of penalty on shri tarun oberoi, submitted that no penal action is warranted against him under rule 209 a since the main case against jodhpur supply co. had been settled under k.v.s. scheme; that further there was no personal involvement by him nor there was an attempt to evade duty; that the finding in the impugned order that tarun oberoi was personally involved does not lead to any conclusion; that the commissioner has gone beyond the scope of the show-cause notice; that there is nothing to show his personal involvement.5. shri s.c.kamra, ld. advocate for m/s reebok india company, submitted that they procure branded bags from local manufactures for onward trading in india; that they are placing orders upon m/s jodhpur supply company for supply of bags on principal to principal basis; that in the terms and conditions of the purchase orders, prices were all inclusive except taxes as applicable; that thus except for sales tax and other local taxes, the price includes everything including excise duty, if any payable by the manufacturer; that these facts were deposed by shri manish dawar, executive director and secretary, in his statement dt.11-9-1997. the ld. advocate also reiterated the effect of settling the matter under karvivad samadhan scheme by jodhpur supply company and relied upon the decision in the case of c.c.e., mumbai iii vs. shri bhai chand u. doshi, 2001(43) rlt 176 (cegat) wherein it was held that the proceedings against directors for imposition of penalty had been correctly dropped since the principal noticee had gone under k.v.s.scheme. he submitted that accordingly no fine of rs. 1,20.000/- is excessive and the same needs to be reduced considering the over-all facts and circumstances of the case and also considering the fact that they were forced by the department to pay duty towards goods seized from their premises; that no duty can be charged from the buyers; that further the impugned goods were also covered by the demand of duty made by the department from m/s jodhpur supply company; that duty is demandable only from the manufacturers. he finally submitted that in view of the k.v.s. scheme, no penalty is imposable on them; that further there was no need for co-notices to file any separate declaration; that even under rule 209a penalty can be imposed only on a person, who knows or has reason to believe that the goods in respect of which he is dealing are liable to confiscation; that it has been held in shri nath cement industries vs. cce jaipur, 1994(73) elt 142(t) that the penalty under rule 209a cannot be imposed in the absence of any evidence of guilty knowledge on the part of the person concerned; that the burden to prove knowledge of the person concern is also on the department as held in motilal padampat udyog vs. c.c.e., patna, 1998(104) elt 39(t); that they had no knowledge about the goods being cleared without payment of duty by m/s jodhpur supply company.6. countering the arguments of both the ld. advocates, shri prabhat kumar, (sic) , ld. s.d.r., submitted that each clearance of (sic) excisable goods is a new/sepearate assessment and accordingly demand of duty can be raised by the department for each clearance of the goods; that it is for the sake of convenience that demand for the period of 6 months/5 years are raised; that earlier clearances of goods were subject matter of the case which was settled under k.v.s.scheme and that settlement has no bearing upon the present matter and will not after any action by the department in respect of goods seized for violation of the provisions of central excise law; that the impugned goods were not covered by the settlement made by jodhpur supply company under k.v.s. scheme; that as per section 87(m) of finance act 1998, where a show ause notice has been issued in respect of seizure of goods and demand of duties the tax arrears shall not include the duties on such seized goods where such duties on the seized goods have not been quantified. the ld. sdr , further, submitted that any misunderstanding on the part of the appellants will not wipe out the contravention of the provisions of law; that the registration by jodhpur supply company with sales tax department will not take away the necessity of registration by them with the central excise department under rule 174 of the central excise rules; that as the appellant no. 1 has not mentioned about the goods bearing the brand names of others, as held by madras high court in limenaph chamicals vs. union of india, 1993 (68) elt 77 (mad) extended period of five years is invokable. reliance was also placed upon the decision in the case of s.p.gupta & sons vs.u.o.i., 1993(68)elt 530 (all). he further contended that as the duty burden on the goods was not discharged before their clearance from the factory, goods are liable for confiscation and penalty is imposable on the parties concerned.7. the ld. s.d.r. also mentioned that excisable goods manufactured are required to be entered into rg -i register daily; that as the goods manufactured over a period of time were not entered in rg i goods, these are liable to confiscation; that if person handling the work was not well for a prolonged period, some other arrangements should have been made by the appellants; that the board's instruction, relied upon by the ld. advocate, was regarding entry of goods on day-to-day basis; that instruction provided that if goods are manufactured, enter the same if goods are cleared, enter the same in rgi. he finally mentioned that shri tarun oberoi is running the affairs of the appellant; that he was found in the factory and he never claimed that he was a sleeping partner; that as such penalty is imposable on him; that the excisable goods found in the premises were cleared without non-payment of duty and as such these were rightly confiscated.8. we have considered the submissions of both the sides. the present proceedings have been initiated by the department in respect of the excisable goods which were seized as these were either cleared from the place of manufacture without payment of duty or were not entered in rg i register. the case which was settled by m/s jodhpur supply company under the kar-vivad samadhan scheme, 1998, was in respect of goods cleared without payment of duty. the present proceedings are independent proceedings and as such settlement of the said case will not have any bearing on the confiscation and imposition of penalty in this case. it is not in dispute that the excisable goods bearing brand name of other person were cleared without payment of duty and as such the goods are liable to confiscation under the provisions of rule 173q of the central excise rules. we, therefore, find no infirmity in the impugned order regarding confiscation of the goods found in tempo no hr -10-0472 as well as goods seized from the premises of m/s reebok india co.9. as per provisions of rule 53 of the central excise rules, every manufacturer has to maintain a stock account in which he shall entire daily, interalia, the quantity of goods manufactured, quantity and value of the goods removed. even the circular dated 20-5-1996, referred to by the ld. advocate, which provides a simplified export procedure for exempted units, clearly provides that such units are required to maintain a simple account record of production and clearance. it only provided that entries need not be made on days when there is no production or clearance. it is thus evident that the entries are required to be made when there is production or clearance of goods. as the appellants namely m/s jodhpur supply company and m/s crew b.o.s.products pvt. ltd have not entered the goods manufactured by them in rg i register, the goods have become liable for confiscation under the provisions of rule 173q central excise rules. rule 173q(1)(b) clearly provides that if any manufacturer does not account for any excisable goods manufactured/produced by him, such goods shall be liable to confiscated and the manufacturer shall be liable to penalty. the prolonged sickness of their employee is not sufficient reason for not entering the goods in rg i register. if they were carrying out all the activities of manufacturing and clearing the excisable goods, they should have made arrangements for entering the same also in the statutotry records, particularly when the employee was on prolonged sick leave. even in electro (india) case, relied upon by the ld.advocate shri kapoor, it was held that "it is true that there is a liability on the manufacturer to maintain the records properly and uptodate." in that case there was only non maintenance of record far a day on acount of sudden sickness of the two store keepers. the tribunal in the said case only reduced the redemption fine and penalty holding that fine and penalty has to be commensurate withe the gravity of the offence. we also found no substance in the submissions of the appellants that as goods manufactured by m/s crew b.o.s. products (p) ltd were for export, the goods need not be confiscated far (sic) mon entry in the statutory records. all the goods which are manufactured of produced are to be entered in rg i records. the goods meant for export out of india are not exempted goods as these are either exported under rebate procedure i.e. clearance on payment of duty, or under bond procedure, i.e. cleared on execution of bond. in alpha garments 1996(86) elt 600, relied upon by the ld. advocate, the tribunal only held that demand of duty was not justifiable as the goods had been actually exported. but as regards penalty the tribunal found force in the arguments advanced by the d.r. "that persons should not be allowed to go scot free who have shown scant respect of law and contravened the provisions of the central excise and salt act and relevant rules." accordingly we hold that goods which were not entered into r.g. i by m/s jodhpur supply co. and m/s crew b.o.s. products (p) ltd are liable to confiscation and penalty is also imposable on them.10. as far as imposition of penalty on shri tarun oberoi is concerned, we agree with the submissions of the ld. sdr that he was looking after the affairs of the firm as partner and as the goods were cleared without payment of duty, penalty is imposable upon him. we also do not find that the commissioner in imposing penalty on him has gone beyond the scope of the snow cause notice. coming to the liability to penalty of m/s reebok india co. we agree with the ld. advocate that no penalty is imposable on them under rule 209a as it cannot be said that they knew or had reason to believe that the goods received by them were liable to confiscation. however, as the duty of excise was payable on the goods found in the premises of m/s reebok india co. and they had chosen to deposit the duty by tr 6 challan, the appropriation of the same in the imposed order cannot be faulted.11. we, however, feel that the amount of redemption fine and quantum of penalty are required to be reduced taking into consideration all the facts and circumstances of the case and gravity of offence. we, thus pass the following order: the confiscation of goods is upheld. redemption fine is reduced to rs. 40,000/- penalty is reduced to rs. 30,000/- the confiscation of goods is upheld; redemption fine is reduced to rs. 10,000/- penalty is reduced to rs. 5000/- the confiscation of goods is upheld; redemption fine is reduced to rs. 50,000/-; appropriation of excise duty is upheld; penalty imposed on them is set aside.

Judgment:
1. The issue involved in these four appeals, arising out of a Common Order passed by the Commissioner, Central Excise, Delhi III is whether the nylonfabrie bags bearing brand name "Reebok" valued at Rs. 2,41,72/- seized from tempo on 10-9-1997, nylon/canvas bags bearing brand name "Reebok" and "Levis" valued at Rs. 1,44,548 seized from the factory premises of M/s Jodhpur Supply Co. on 10-9-1997, bags bearing name "Reebok" valued at Rs. 4,78,354 seized from the premises of M/s Reebok India co. and Leather Pad, diaries Wallets valued at Rs. 28,92,570.94 p. seized from the premises of M/s Crew B O.S.Products P.Ltd on 10-9-1997 are liable to Confiscation under Rule 173 Q of the Central Excise Rules and Whether Penalty is imposable on all the Appellants.

2.1 Shri R. K. Kapoor, ld. Advocate for Appellants M/s Jodhpur Supply Company, M/s Crew B.O.S. products Pvt. Ltd and Shri Tarun Oberoi, submitted that the main case of the Revenue against Appellant No. 1 related to demand of duty of excise amounting to Rs. 12,74,238 in respect of the goods manufactured and cleared by them for supply to M/s Reebok India Company and M/s Levis Strauss India Pvt. Ltd under the brand names of "Reebok" and "Levis"; that the said case has been got settled by M/s Jodhpur Supply Company under the Kar Vivad Samadhan Scheme; that the present matters pertain to the confication of seized goods and imposition of penalty. The ld. Advocate, further, submitted that the entries in R.G.I. register could not be made after 28-6-1997 as the employee who was assigned that work was on medical leave; that documentary evidence about illness was submitted to the Department; that Department has not alleged unauthorised removal of the goods which were lying in the factory ; that the lapse was of technical nature; that all the issues regarding non registration of the premises and non maintaining of R.G.I. had been settled under K.V.S. Scheme and accordingly, these points should not have been raised again; that the Appellant No 1 had a registration certificate from the Department for the old premises; that they had shifted to the new premises in June, 1997; that they did inform the Sales Tax Department about change of premises and, therefore, the allegation that the unit had not got the new premises registered does not have much force; that they were approaching the Range Officers for registration but for want of Rent Agreement Central Excise Department did not register them in respect of new premises; that the allegation to the effect that they had not filed classification declaration under Rule 173 B of the Central Excise Rules is not correct as the show cause notice dt. 4-3-98 makes a mention of the declaration (Page 4 of the Notice.) 2.2 The ld.Advocate also mentioned that the Appellants were under the bonafide belief that they were not manufacaturing any branded goods for the reason that they were not engaged in manufacturing of any core product of Reebok and Levis and some goods were only for promotional purposes; that no objection was also raised by the Department on R.T.12 Returns submitted by them. He relied upon the decision in Automobiles Ltd. Vs. CCE. 1993 (67) 147 (T); Associated Cememnt Cos Ltd. Vs. C.C.E. 1992 (57) ELT 178 (T) and MAC Lab vs. C.C.E.1985 (19) ELT 307. He further contended that provisions of Rule 52A were also not violated as the goods were cleared under Bill and Challan; that the goods were not removed clandestinely; that raw material register was duly maintained, that therefore, non accountal of goods in R.G.I on account of sickness of store keeper will not warrant imposition of any penalty or a minimal penalty will be sufficient. Reliance was placed on the decision in the case of Electra (India) Ltd. Vs. CCE., Meerut, 1987 (30) ELT 817 (T).

2.3 The ld. Advocate also contended that as the goods in factory had not been inspected the same were not fit to be entered into RG I register. Reliance was placed on the decision in Uptron Powertronics Ltd., Vs.C.C.E., 1991 (56) ELT 245. He also relied upon the following decisions in support of his contention that the goods lying in factory cannot be confiscated under Rule 173Q in absence of any intention to remove the same clandestinely and Penalty also not be imposed under Rule 173Q.3. In respect of good seized from the factory premises of M/s Crew B.O.S.Products Pvt. Ltd, the ld. Advocate submitted that all the goods were meant for export and not for sale in India; that even this fact is confirmed by the show-cause-notice as it is mentioned therein that "subsequenst investigation of records revealed that no domestic sale was effected from M/s Crew B.O.S. Products and all the goods being manufactured in the said M/s Crew B.O.S.Products are meant for export;" that after the provisional release of the seized goods, the same were exported; that accordingly question of removal of goods without payment of duty does not arise as the goods were meant for export; that there was no less of revenue to the Government as goods had been finally exported. He also referred to Board's Circular F. No. 212/46/96-Cx dt.

20-5-1996 wherein it was mentioned that units may be asked to maintain a simple record of production and clearance and contended that entries are to be made only when production and clearance both take place. He also submitted that the circulars are binding on officers as held by the Supreme Court in the case of Ranadey Mironutrients Ltd. Vs. C.C.E.1996(87) ELT 19 (S.C.). He also relied upon the decision in the case of Alpha Garments Vs. C.C.E., New Delhi,1996 (86) ELT 600(T) wherein the goods were exported without maintaining proper records and without issuing gate passes, the Tribunal reduced the penalty. He also mentioned that Crew B.O.S. Products Pvt. Ltd, being Co-noticee of Jodhpur Supply Company which had settled the matter under K.V.S.Scheme, no penalty can be imposed on them as per Ministry's Order dt. 8-12-1998 as reported in 1999 (80) ECR 8C.4. The ld. Advocate finally arguing against the imposition of penalty on Shri Tarun Oberoi, submitted that no penal action is warranted against him under Rule 209 A since the main case against Jodhpur Supply co. had been settled under K.V.S. Scheme; that further there was no personal involvement by him nor there was an attempt to evade duty; that the finding in the impugned Order that Tarun Oberoi was personally involved does not lead to any conclusion; that the Commissioner has gone beyond the scope of the show-cause notice; that there is nothing to show his personal involvement.

5. Shri S.C.Kamra, ld. Advocate for M/s Reebok India company, submitted that they procure branded bags from local manufactures for onward trading in India; that they are placing Orders upon M/s Jodhpur Supply Company for supply of bags on principal to principal basis; that in the terms and conditions of the Purchase Orders, prices were all inclusive except taxes as applicable; that thus except for sales tax and other local taxes, the price includes everything including excise duty, if any payable by the manufacturer; that these facts were deposed by Shri Manish Dawar, Executive Director and Secretary, in his statement dt.

11-9-1997. The ld. Advocate also reiterated the effect of settling the matter under Karvivad Samadhan Scheme by Jodhpur Supply Company and relied upon the decision in the case of C.C.E., Mumbai III Vs. Shri Bhai Chand U. Doshi, 2001(43) RLT 176 (CEGAT) wherein it was held that the proceedings against Directors for imposition of penalty had been correctly dropped since the principal noticee had gone under K.V.S.Scheme. He submitted that accordingly no fine of Rs. 1,20.000/- is excessive and the same needs to be reduced considering the over-all facts and circumstances of the case and also considering the fact that they were forced by the Department to pay duty towards goods seized from their premises; that no duty can be charged from the buyers; that further the impugned goods were also covered by the demand of duty made by the Department from M/s Jodhpur Supply Company; that duty is demandable only from the manufacturers. He finally submitted that in view of the K.V.S. Scheme, no penalty is imposable on them; that further there was no need for co-notices to file any separate declaration; that even under Rule 209A penalty can be imposed only on a person, who knows or has reason to believe that the goods in respect of which he is dealing are liable to confiscation; that it has been held in Shri Nath Cement Industries Vs. CCE Jaipur, 1994(73) ELT 142(T) that the penalty under Rule 209A cannot be imposed in the absence of any evidence of guilty knowledge on the part of the person concerned; that the burden to prove knowledge of the person concern is also on the Department as held in Motilal Padampat Udyog Vs. C.C.E., Patna, 1998(104) ELT 39(T); that they had no knowledge about the goods being cleared without payment of duty by M/s Jodhpur Supply Company.

6. Countering the arguments of both the ld. Advocates, Shri Prabhat Kumar, (sic) , ld. S.D.R., submitted that each clearance of (sic) excisable goods is a new/sepearate assessment and accordingly demand of duty can be raised by the Department for each clearance of the goods; that it is for the sake of convenience that demand for the period of 6 months/5 years are raised; that earlier clearances of goods were subject matter of the case which was settled under K.V.S.Scheme and that settlement has no bearing upon the present matter and will not after any action by the Department in respect of goods seized for violation of the provisions of Central Excise Law; that the impugned goods were not covered by the settlement made by Jodhpur Supply company under K.V.S. Scheme; that as per Section 87(m) of Finance Act 1998, where a show ause notice has been issued in respect of seizure of goods and demand of duties the tax arrears shall not include the duties on such seized goods where such duties on the seized goods have not been quantified. The ld. SDR , further, submitted that any misunderstanding on the part of the Appellants will not wipe out the contravention of the provisions of law; that the registration by Jodhpur Supply company with Sales Tax Department will not take away the necessity of Registration by them with the Central Excise Department under Rule 174 of the Central Excise Rules; that as the Appellant No. 1 has not mentioned about the goods bearing the brand names of others, as held by Madras High court in Limenaph Chamicals Vs. Union of India, 1993 (68) ELT 77 (Mad) extended period of five years is invokable. Reliance was also placed upon the decision in the case of S.P.Gupta & Sons Vs.

U.O.I., 1993(68)ELT 530 (All). He further contended that as the duty burden on the goods was not discharged before their clearance from the factory, goods are liable for confiscation and penalty is imposable on the parties concerned.

7. The ld. S.D.R. also mentioned that excisable goods manufactured are required to be entered into RG -I Register daily; that as the goods manufactured over a period of time were not entered in RG I goods, these are liable to confiscation; that if person handling the work was not well for a prolonged period, some other arrangements should have been made by the Appellants; that the Board's instruction, relied upon by the ld. Advocate, was regarding entry of goods on day-to-day basis; that instruction provided that if goods are manufactured, enter the same if goods are cleared, enter the same in RGI. He finally mentioned that shri Tarun Oberoi is running the affairs of the Appellant; that he was found in the factory and he never claimed that he was a sleeping partner; that as such penalty is imposable on him; that the excisable goods found in the premises were cleared without non-payment of duty and as such these were rightly confiscated.

8. We have considered the submissions of both the sides. The present proceedings have been initiated by the Department in respect of the excisable goods which were seized as these were either cleared from the place of manufacture without payment of duty or were not entered in RG I register. The case which was settled by M/s Jodhpur Supply Company under the Kar-vivad Samadhan Scheme, 1998, was in respect of goods cleared without payment of duty. The present proceedings are independent proceedings and as such settlement of the said case will not have any bearing on the confiscation and imposition of penalty in this case. It is not in dispute that the excisable goods bearing brand name of other person were cleared without payment of duty and as such the goods are liable to confiscation under the provisions of Rule 173Q of the Central Excise Rules. We, therefore, find no infirmity in the impugned Order regarding confiscation of the goods found in Tempo No HR -10-0472 as well as goods seized from the premises of M/s Reebok India Co.

9. As per provisions of Rule 53 of the Central Excise Rules, every manufacturer has to maintain a stock account in which he shall entire daily, interalia, the quantity of goods manufactured, quantity and value of the goods removed. Even the circular dated 20-5-1996, referred to by the ld. Advocate, which provides a simplified export procedure for exempted units, clearly provides that such units are required to maintain a simple account record of production and clearance. It only provided that entries need not be made on days when there is no production or clearance. It is thus evident that the entries are required to be made when there is production or clearance of goods. As the Appellants namely M/s Jodhpur Supply Company and M/s Crew B.O.S.Products Pvt. Ltd have not entered the goods manufactured by them in RG I register, the goods have become liable for confiscation under the provisions of Rule 173Q Central Excise Rules. Rule 173Q(1)(b) clearly provides that if any manufacturer does not account for any excisable goods manufactured/produced by him, such goods shall be liable to confiscated and the manufacturer shall be liable to penalty. The prolonged sickness of their employee is not sufficient reason for not entering the goods in RG I register. If they were carrying out all the activities of manufacturing and clearing the excisable goods, they should have made arrangements for entering the same also in the statutotry records, particularly when the employee was on prolonged sick leave. Even in Electro (India) case, relied upon by the ld.Advocate Shri Kapoor, it was held that "It is true that there is a liability on the manufacturer to maintain the records properly and uptodate." In that case there was only non maintenance of record far a day on acount of sudden sickness of the two store keepers. The Tribunal in the said case only reduced the redemption fine and penalty holding that fine and penalty has to be commensurate withe the gravity of the offence. We also found no substance in the submissions of the Appellants that as goods manufactured by M/s Crew B.O.S. Products (P) Ltd were for export, the goods need not be confiscated far (sic) mon entry in the statutory records. All the goods which are manufactured of produced are to be entered in RG I records. The goods meant for export out of India are not exempted goods as these are either exported under Rebate Procedure i.e. clearance on payment of duty, or under Bond Procedure, i.e. cleared on execution of Bond. In Alpha Garments 1996(86) ELT 600, relied upon by the ld. Advocate, the Tribunal only held that demand of duty was not justifiable as the goods had been actually exported. But as regards penalty the Tribunal found force in the arguments advanced by the D.R. "that persons should not be allowed to go scot free who have shown scant respect of law and contravened the provisions of the Central Excise And Salt Act and relevant rules." Accordingly we hold that goods which were not entered into R.G. I by M/s Jodhpur Supply Co. and M/s Crew B.O.S. Products (P) Ltd are liable to confiscation and penalty is also imposable on them.

10. As far as imposition of penalty on Shri Tarun Oberoi is concerned, we agree with the submissions of the ld. SDR that he was looking after the affairs of the firm as partner and as the goods were cleared without payment of duty, penalty is imposable upon him. We also do not find that the Commissioner in imposing penalty on him has gone beyond the scope of the snow cause notice. Coming to the liability to penalty of M/s Reebok India Co. we agree with the ld. Advocate that no penalty is imposable on them under Rule 209A as it cannot be said that they knew or had reason to believe that the goods received by them were liable to confiscation. However, as the duty of excise was payable on the goods found in the premises of M/s Reebok India Co. and they had chosen to deposit the duty by TR 6 Challan, the appropriation of the same in the imposed Order cannot be faulted.

11. We, however, feel that the amount of redemption fine and quantum of penalty are required to be reduced taking into consideration all the facts and circumstances of the case and gravity of offence. We, thus pass the following Order: The confiscation of goods is upheld. Redemption fine is reduced to Rs. 40,000/- penalty is reduced to Rs. 30,000/- The confiscation of goods is upheld; redemption fine is reduced to Rs. 10,000/- penalty is reduced to Rs. 5000/- The confiscation of goods is upheld; redemption fine is reduced to Rs. 50,000/-; appropriation of excise duty is upheld; penalty imposed on them is set aside.