TMI Blog1989 (5) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... gularities were detected:- (i) The production entries in R.G. 1 register were not being made daily and were being made on the 3rd day. (ii) The appellants were obliged to maintain R.G. 1 register with separate openings with each value-slab as per Government of India s Notification No. 251/82-C.E., dated 8-11-1982, as amended. But the value-slab-wise register of processed cotton fabrics and man-made fabrics were not being maintained by the appellants. It was also detected that the quantity of processed cotton fabrics, duly measured and folded, found stored in the packing room, was not entered in R.G. 1 register. Shri Shiv Gulam Srivastava, authorised representative of the appellants and Shri S.K. Zaki, Warehouse Incharge of the appellants, present at the time of the aforesaid checking, failed to produce any account showing the quantity of fabrics received and stored after final processing, finishing, folding and measurement had been completed thereon. (iii) On physical verification, a quantity of 2061 meters of finally processed and finished man-made fabrics duly folded and measured was found stored in the packing room/warehouse of the factory, but this quantity was found not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully and properly explained to him by the Collector, Central Excise, Meerut during the course of Regional Advisory Committee Meeting but still he could not ensure proper maintenance of R.G. 1 Register. He mentioned the total quantity of shortage of 33849 Mtrs. of grey cotton fabrics under one head, but on examination, it was found that the quantity included sort Nos. 3135, 3187 and 3135A which were man-made fabrics. This quantity of 3720.6 Mtrs. or 3885.57 Sq. Mtrs. of man-made fabrics and the remaining quantity of 31028.4 Mtrs. or 28448.13 Sq. Mtrs. of cotton fabrics had been cleared after processing from the factory in a manner otherwise than as provided under the Central Excise Rules, 1944. 1.4. The aforesaid unaccounted for stocks of cotton fabrics, both grey and processed, Fents, Rags, man-made fabrics as detailed above, were seized under the reasonable belief that the same are liable for confiscation under the Central Excise Rules. 1.5. On due adjudication by the Additional Collector the charges were upheld against the appellants herein and a penalty of Rs. 50,000/- was imposed on them under Rule 173Q. The adjudicating authority has ordered confiscation of 2061 Mtrs. of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further noticed that the abovesaid authority of Collector of Central Excise, Allahabad whereunder they have claimed to have been permitted to post entries in R.G. 1 on the 3rd day has not been filed either in original or in a copy and therefore, it is not possible to find out the context and the scope of such orders, if any. Instead, they have filed a photo copy of a single sentence-remark quoting some numbers of the letters giving dates of November, 1965 and signed by Resident Inspector of Central Excise on 1-12-1965 in a photo copy. This photo copy does not mention that this permission was given to M/s Raza Textiles as no name of any assesses is mentioned. Even the remark given in this paper slip is neither addressed to nor endorsed to M/s Raza Textiles. Therefore, such a document cannot be taken as an authority for non-accountal of production by M/s. Raza Textiles as detected in April, 1984. 4. We have carefully considered this issue and the pleas advanced on both sides thereon. We observe that the adjudicating authority s rebuttal of the permission given by the Collector of Central Excise, Allahabad, reproduced above is untenable. The permission, no doubt, is given in one se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s woven at the off loom stage. No account is kept at the intermediate stage of processed fabrics lying in the finishing room or the packing room. It is only after the processed fabric has been inspected, measured, folded and baled and the bales are removed to the bonded storeroom that the account thereof is maintained in EB-4 register. The corresponding remark about this stock account in EB-4 register is given in the R.G. 1 register against the corresponding date. This has been the practice, according to the learned consultant and was never challenged by the department. This has been the practice in the other composite mills of the State according to a letter dated 19-2-1986 from the U.P. Chamber of Commerce relied upon by the learned consultant. The precise reason for not maintaining the accounts at intermediate stage of processed fabrics is that it is impossible to arrive at any enumeration of stock-in-process, unless and until the variety of fabric is measured in its entirety, i.e. in all the places and points of the shop floor of the manufacturer where such fabric is undergoing process or stacking . The fabric is already accounted for in grey stage at off-loom stage and it wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med that all the grey fabrics produced in the factory was initially accounted for in R.G. 1, it would not mitigate the allegations in the show cause notice. The party s plea that accountal of grey as well as processed fabrics would involve duplicate accounting and that instructions do not provide for maintenance of two R.G. 1 accounts for the same goods, is manifestly mis-conceived. As already discussed above, the grey fabrics and the processed fabrics are not the same goods. When after initial accountal at the grey stage, fabrics are processed and finished, they will be deducted from the R.G. 1 for grey fabrics and will be added to the RG-1 of the processed fabrics. In the circumstances, there is no question of any over-lapping or duplicate maintenance of R.G, 1. For the above reasons, the letter dated 7-1-1985 from U.P. Chamber of Commerce, Kanpur does not lend any force to the defence contention . 53. We have carefully considered the pleas advanced on both sides on this issue and we are inclined to agree with the appellants, learned consultant that this is again a procedural matter which had been in vogue to the full knowledge of the departmental officers. It was not as if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o many inspections and audit parties. Therefore, the order of confiscation of fabrics by the adjudicating authority is set aside and consequently redemption fine is also set aside. 5.4. Next allegation is regarding non-maintenance of accounts slab-value-wise. For maintenance of accounts in this form, the department has relied upon a Notification 251/82. The appellants have urged that it is not possible at all to maintain accounts slab-value-wise. They manufacture about 500 different sorts of fabrics and prices thereof keep ^ fluctuating involving change of slabs. Accordingly, slabwise recording of entries would not be practicable. In this view of practical difficulty the jurisdictional Central Excise authorities, the inspecting officers Collectorate s Internal, and Accountant General s, Audit Parties, never raised any objection in this regard. 5.5. We appreciate the difficulty of the appellants. This is again a matter of procedure and if there has been any shortcoming in following the procedure on the part of the appellants matter ought to have been brought to the notice of the appellants immediately by the concerned authorities and the procedural defect rectified. A practical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... significance and it constitutes a valid evidence for finding out the actual production and removal of excisable goods in the factory. Dealing with the argument that the production accounted for in R.G. 1 was more than that shown in the note-book, the learned adjudicating authority observes as follows:- I find that this argument is neither here nor there because if the accounted production was more than that recorded in the note-book the assessee have to prove whether the production reflected in the note-book was at all incorporated in the R.G. 1 register. 6.2. The learned consultant on the above issue has further stated that no evidence of removal of goods has been adduced by the department. He submits that leave apart the evidence of actual removal of goods, there is not even a foot-print thereof. He also submits that the appellants are manufacturing about and accounting for roughly 40,000 mtrs. fabric a day. It would be patent injustice to impute to them an allegation of removal of goods on such a petty scale. Some evidence of removal howsoever indirect it may be is necessarily called for particular when a higher quantum of production has been shown in the R.G.I than the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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