TMI Blog2010 (12) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... umbai raises following substantial questions of law :" i) Whether on the facts and circumstances of the case, the Tribunal was right in law in holding that the goods were not required to enter in RG I ? ii) Whether on the facts and circumstances of the case, the Hon'ble Tribunal is right in law in holding that since there is no confirmation from the buyer that the goods were as per specification and therefore justified in not entering in the RG I? iii) The Hon'ble Tribunal had failed to take into account the provisions of Rules 173 Q (1) of the Central Excise Rule, 1944?" 2 The facts necessary to be cited for adjudication of the said substantial questions of law can be conveniently stated thus :The Respondents herein are engaged in manufacture of various products, which are, excisable goods failling under Chapters 22, 28, 29, 34, 38 and 39 of the Central Excise Tariff Act, 1985 and are also availing modvat facility under Rule 57A of the Central Excise Rules, 1944 (herein after for the brevities sake referred to as "the Rules"). In so far as the present proceedings are concerned, the goods in question are 672 bags of sodium salt. The officers of the AppellantRevenue during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner (Prev), Central Excise Customs, Surat confirmed the said show cause notice. The Adjudicating Authority recorded a finding that the goods were fully manufactured and were in a ready for despatch condition, but the same have not been accounted for in the RGI register and the Respondents therefore had contravened the provisions of the Rules. The Adjudicating Officer further recorded a finding that the said action was indicative of the fact that there was some deliberate and ulterior intention to deal with the said goods in a manner than otherwise provided in the Central Excise Salt Act,1944 (for brevities sake herein after referred to as "the said Act"). The Adjudicating Authority, therefore, ordered confiscation of 672 bags. However, since the said goods were provisionally released on execution of bond for full value and since the same were not physically available for confiscation, the Adjudicating Authority imposed redemption fine of Rs.1,11,000/under Section 34 of the said Act and directed appropriation of the same from the bank guarantee. The Adjudicating Authority confirmed the Basic Central Excise Duty amounting to Rs.2,21,760/paid by the Respondents at the time o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs were duly packed and in stiched condition in plastic bags with complete marking on it, were not entered in the RGI register as semifinished or finished goods, the Respondents had contravened Rule 53 of the Rules; ii) That the Tribunal failed to appreciate that nonaccountal of goods in the prescribed form at fully finished stage even if they were defective or damaged amounts to violation of the Rules and it was, therefore, not required to prove the attempt or otherwise of clandestine removal; iii) That in terms of Rule 173Q(1) of the Rules, nonaccounted goods were liable to confiscation and in lieu of confiscation, the assessee was liable to pay redemption; iv) That the Tribunal erred in accepting the case of the Respondents that the goods were not approved by the buyer. The said point was never raised before the Adjudicating Authority and, therefore, could not be raised at the stage of Second Appeal as the same entails a finding to be recorded on facts; v) That the Tribunal erred in recording a finding that since the goods were not approved by the buyer, the said goods cannot be said to be fully finished and, therefore, require no entry in the RGI Register. The Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods made in the factory shall be deposited in such storeroom or place. [(2A) Notwithstanding anything contained in subrule (2), the Board may, subject to such conditions and limitations as may be laid down by it, permit dutypaid icecream falling under Heading No.21.05 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) to be deposited in storeroom or other place of storage] (3) Every such storeroom or place shall be declared by the manufacturer and approved by the [Commissioner]. [(3A) Where the provisions of Chapter VII of these rules have been extended by the Central Government by notification in the Official Gazette to any excisable goods, every such storeroom or other place of storage in the premises of a factory manufacturing such goods shall be deemed to be a warehouse [registered] under Rule 140] (4) The manufacturer shall maintain an Entry Book in the proper Form in which he shall on the same day on which goods are deposited in or removed from such storeroom or other place of storage, write and enter in the proper column the date of such deposit or removal, the full description, quantity, weight and value of the goods so deposited or removed, the nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) correctly keep such book, account or register in the manner required, and shall not cancel, obliterate, or alter any entry therein, except for correction of any errors, with the sanction and in the presence of the proper officer, and shall not make any entry therein which is untrue in any particular; (iii) keep the book, account or register at all times ready for the inspection of the officers, and shall permit any officer to inspect it and make any such minute therein or any extract therefrom, as the officer thinks fit, and shall, at any time, if demanded, send it to the proper officer and any person who fails to enter the required particulars within the time prescribed in the relevant rule, or who fails to keep such book, account or register, as the case may be, or to deliver it up to the officer on demand or who obstructs or hinders such officer in making any minute therein or extract therefrom, or conveys away or conceals it, or destroys or tears our any leaf therefrom, or makes any false entry therein or fraudulently alters any entry therein, shall be liable to a penalty which may extend to two thousand rupees and all the goods of which due entry has not been made in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in these rules, or utilises [credit of duty or money] in respect of [inputs or capital goods] in contravention of any of the provisions of these rules, or does not render proper and true account of the receipt and disposal of the said [inputs or capital goods] and the [credit of duty or money] taken thereon as required under these rules, or contravenes any of the provisions contained in [Section AA or AAA or AAAA of Chapter V of these rules]; or [(bbb) enters wilfully any wrong or incorrect particulars in invoice issued for the excisable goods dealt by him with intent to facilitate the buyer to avail of credit of the duty of excise in respect of such goods which is not permissible under these rules;] or (c) engages in the manufacture, production or storage of any excisable goods without having applied for the [registration certificate] required under Section 6 of the Act; or (d) contravenes any of the provisions of these rules with intent to evade payment of duty, then, all such goods shall be liable to confiscation and the [manufacturer, producer, registered person of a warehouse or a registered dealer], as the case may be, shall be liable to a penalty not exceeding three times t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the goods in the register is prescribed. 10 In the light of the above mentioned statutory provisions, the facts of the instant case would have to be considered. In the instant case, on 12.4.1994 the officers of the AppellantRevenue, during the routing PBC checks, found that the finished stock of 24D sodium salt duly packed and in stiched condition in plastic bags with complete marking on it totally umbering 672 bags weighing 16800 kgs valued at Rs.11,08,800/were lying in the packing section of the auxiliary depart of the factory premises of the Respondents. On inspection of the records of the Respondents, it was found that the said goods were not accounted for, though they were fully manufactured, in a finished condition and ready for despatch. The Respondents had therefore contravened the aforesaid statutory provisions. It was also noticed from the records of the Respondents that the seized goods were manufactured 45 days prior to the date of seizure and, in spite of the same, they were not accounted for in the RGI register and, therefore, it was ex facie clear that though the goods under seizure were fully processed manufactured, they were not accounted for in the RGI Regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entss failed to enter the production in the RG1. There was no need to enter the said goods in the RG1, the question of consequent failure and penal consequences do not arise. 6 The entire process of adjudication being based on assumption and presumptions, I hold that the learned Commissioner (Appeals) was right in setting aside the order in appeal. 7 Consequently, the revenue appeal fails and the same is rejected" 12 As can be seen, the CESTAT observed that the Adjudicating Authority proceeded on the basis that the goods were claimed to have reprocessed by the Respondents after obtaining permisson from the Range Superintendent which was according to it not factually correct, as the Assistant Commissioner concerned denied of having given any such permission and had therefore according to the CESTAT adopted a strange way of disposal of the appeal. The CESTAT has also proceeded on the basis that since there is no confirmation from the buyer that the goods were as per its specifications and yet the Respondents failed to enter the production in the RG1 and since there was no entry of the said goods in the RG1, consequent failure and penal consequences do not arise. The CESTAT observed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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