Dhanuka Pesticides Ltd. Vs. Commissioner of Central Excise, - Court Judgment

Excerpt:
1. the appellants are engaged in the manufacture of pesticides. while patrolling central excise officers intercepted a tempo loaded with pesticides. on an enquiry, the driver of the tempo produced two invoices. as there were certain corrections in the documents, the officers brought back the tempo into the factory premises from where the goods were loaded. checking of the records of the factory revealed that no debit entry was made in rg 23a part ii. the goods were, therefore, seized alongwith the tempo.2. on physical verification of the stocks, an excise of goods valued at rs. 17,77,205/- to the recorded balance was found. the excess goods were seized as they were not accounted in central excise records.statements were recorded. shri k.b. kejarjwal, director of the appellant's firm in his statement stated that the goods were cleared from their factory and actually no duty was debited in rg 23a pt. ii.it was stated that the person who prepared the invoices had to rush back to look after his ailing wife. shri kejariwal admitted that the excess goods found unaccounted for were not recorded as central excise staff of the factory was busy with the central excise audit team as audit was going on. accordingly, a scn was issued to the appellants asking them to explain as to why the seized goods should not be confiscated, why duty should not be demanded on the goods found loaded in the tempo and why penalty should not be imposed. it was also alleged that the appellants had taken in admissible credit of rs. 3,73,571/- on stainless steel drums; caps and leads. the dy. commissioner adjudicated the case, confiscated goods valued at rs. 5,14,825/- recovered from the tempo and give the appellants an option to redeem the same on payment of redemption fine of rs. 25,000/-.3. the dy. commissioner also confiscated the excess goods valued at rs. 17,77,205/- and allowed them to be redeemed on payment of a fine of rs. 1.5 lakhs. he also disallowed modvat credit of rs. 3,73,571/- and imposed the personal penalty of rs. 1,83,363/- under rule 173q.4. we have heard shri v.m. verma, ld. counsel for the appellant and shri atul saxena, ld. dr for the revenue.5. we note that impugned order decided three issues. the first issue was regarding confiscation of pesticides found in the tempo intercepted. in this regard, it was contested that the dealing assistant had to leave the office and therefore, debit entries could not be made in rg 23a part ii. it was also contended that there was sufficient balance in rg 23a part ii available on the date of the interception of the tempo with goods. we note that the goods were covered by the invoices, the description of the goods and the quantity given in the invoice tallied with the goods loaded in the tempo. but the fact remains that till the time of the visit of the officers, the duty stated to have been debited in rg 23a part ii was actually not debited. ld. counsel for the appellant cited the decision of this tribunal in the case of hawkins cookers ltd. v. cce reported in [2001 (131) e.l.t. 98 (t) = 2001 (45) rlt 412]. it was submitted by the appellant that in this case the tribunal held that nominal penalty under rule 173q was leviable when goods are removed under excise invoice without making debit entry in pla though there was sufficient balance. we note that in the instant case, therefore, penalty was imposable. looking to the facts of the case, we find that the penalty is to be nominal. looking to the value of the goods, we find that the redemption fine is nominal.insofar as the excess goods are concerned, we note that the goods do not pertain to the production of the date of the visit of the officers but were produced during the last few days. the contention of the appellant was that since the excise asstt. of the appellant factory was busy with the audit team of central excise, which was auditing their records, therefore, the production could not be recorded is not acceptable in-as-much as it does not take a long time to make entry of the goods in the statutory records more so at least during the visit of audit party proper central excise records should have been maintained.we, therefore, do not see any reason to interfere with the order of the ld. commissioner (appeals) about the confiscation of the goods. the redemption fine in this regard is also nominal looking to the value of the goods.the third issue was regarding disallowance of modvat credit in respect on drums, caps and leads. when the counsel for the appellant was questioned about the evidence to show that the value of the drum was included in the assessable value of the final product, he could not show any evidence. we further note that the dy. commissioner in the order-in-original has observed that shri k.b. kejariwal, director in his statement recorded on the spot on 25-9-97 admitted the wrong availment of modvat credit on the above mentioned goods and voluntarily debited the said amount in rg 23a part ii. since no further evidence was produced before us in this regard, we do not see any reason to interfere with this part of the order.6. in regard to imposition of penalty, we note that a penalty of rs. 1,83,363/- has been imposed. we have summarised our views and observations in the above paragraphs. looking to all the facts of the case, the evidence on record and the submissions made before us, we hold that the penalty is on the higher side. the penalty is, therefore, reduced to rs. 50,000/-.7. but for the above modification, the impugned order is upheld and the appeal is disposed of accordingly.

Judgment:
1. The appellants are engaged in the manufacture of pesticides. While patrolling Central Excise Officers intercepted a tempo loaded with pesticides. On an enquiry, the driver of the tempo produced two invoices. As there were certain corrections in the documents, the Officers brought back the tempo into the factory premises from where the goods were loaded. Checking of the records of the factory revealed that no debit entry was made in RG 23A Part II. The goods were, therefore, seized alongwith the tempo.

2. On physical verification of the stocks, an excise of goods valued at Rs. 17,77,205/- to the recorded balance was found. The excess goods were seized as they were not accounted in Central Excise records.

Statements were recorded. Shri K.B. Kejarjwal, Director of the appellant's firm in his statement stated that the goods were cleared from their factory and actually no duty was debited in RG 23A Pt. II.It was stated that the person who prepared the invoices had to rush back to look after his ailing wife. Shri Kejariwal admitted that the excess goods found unaccounted for were not recorded as Central Excise staff of the factory was busy with the Central Excise audit team as audit was going on. Accordingly, a SCN was issued to the appellants asking them to explain as to why the seized goods should not be confiscated, why duty should not be demanded on the goods found loaded in the tempo and why penalty should not be imposed. It was also alleged that the Appellants had taken in admissible credit of Rs. 3,73,571/- on stainless steel drums; caps and leads. The Dy. Commissioner adjudicated the case, confiscated goods valued at Rs. 5,14,825/- recovered from the tempo and give the appellants an option to redeem the same on payment of redemption fine of Rs. 25,000/-.

3. The Dy. Commissioner also confiscated the excess goods valued at Rs. 17,77,205/- and allowed them to be redeemed on payment of a fine of Rs. 1.5 lakhs. He also disallowed Modvat credit of Rs. 3,73,571/- and imposed the personal penalty of Rs. 1,83,363/- under Rule 173Q.4. We have heard Shri V.M. Verma, ld. Counsel for the appellant and Shri Atul Saxena, ld. DR for the Revenue.

5. We note that impugned order decided three issues. The first issue was regarding confiscation of pesticides found in the tempo intercepted. In this regard, it was contested that the dealing assistant had to leave the office and therefore, debit entries could not be made in RG 23A Part II. It was also contended that there was sufficient balance in RG 23A Part II available on the date of the interception of the tempo with goods. We note that the goods were covered by the invoices, the description of the goods and the quantity given in the invoice tallied with the goods loaded in the tempo. But the fact remains that till the time of the visit of the officers, the duty stated to have been debited in RG 23A Part II was actually not debited. Ld. Counsel for the appellant cited the decision of this Tribunal in the case of Hawkins Cookers Ltd. v. CCE reported in [2001 (131) E.L.T. 98 (T) = 2001 (45) RLT 412]. It was submitted by the appellant that in this case the Tribunal held that nominal penalty under Rule 173Q was leviable when goods are removed under excise invoice without making debit entry in PLA though there was sufficient balance. We note that in the instant case, therefore, penalty was imposable. Looking to the facts of the case, we find that the penalty is to be nominal. Looking to the value of the goods, we find that the redemption fine is nominal.

Insofar as the excess goods are concerned, we note that the goods do not pertain to the production of the date of the visit of the officers but were produced during the last few days. The contention of the appellant was that since the Excise Asstt. of the appellant factory was busy with the audit team of Central Excise, which was auditing their records, therefore, the production could not be recorded is not acceptable in-as-much as it does not take a long time to make entry of the goods in the statutory records more so at least during the visit of audit party proper central excise records should have been maintained.

We, therefore, do not see any reason to interfere with the order of the ld. Commissioner (Appeals) about the confiscation of the goods. The redemption fine in this regard is also nominal looking to the value of the goods.

The third issue was regarding disallowance of Modvat credit in respect on drums, caps and leads. When the Counsel for the appellant was questioned about the evidence to show that the value of the drum was included in the assessable value of the final product, he could not show any evidence. We further note that the Dy. Commissioner in the order-in-original has observed that Shri K.B. Kejariwal, Director in his statement recorded on the spot on 25-9-97 admitted the wrong availment of Modvat credit on the above mentioned goods and voluntarily debited the said amount in RG 23A Part II. Since no further evidence was produced before us in this regard, we do not see any reason to interfere with this part of the order.

6. In regard to imposition of penalty, we note that a penalty of Rs. 1,83,363/- has been imposed. We have summarised our views and observations in the above paragraphs. Looking to all the facts of the case, the evidence on record and the submissions made before us, we hold that the penalty is on the higher side. The penalty is, therefore, reduced to Rs. 50,000/-.

7. But for the above modification, the impugned order is upheld and the appeal is disposed of accordingly.