TMI Blog1990 (1) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... steel (S.S. Wire) and Phosphor Bronze (P.B. Wire mesh) and Filters and Spinnerette Filter Pack made out of the said wire mesh for man made fabric industry. Prior to 1986 the said factory was run in the name of M/s. Hindustan Boilers. On 10-12-1986, the officers of the Central Excise Department visited the appellants unit and found 14 rolls of wire mesh of different sizes admeasuring 2444.72 sq. ft. valued at Rs. 37,593.00 in the machine room which on verification were found to have been not accounted for in RG-1 Register. They also found one room in the factory premises containing the goods pledged with the Bank of Baroda. The said room was got opened by the Bank and on search the officers found 135 rolls admeasuring 24531.34 sq. ft and 29 rolls admeasuring 689.14 sq. mtrs. of wire mesh totally valued at Rs. 13,81,949.06 These bundles were also not accounted for in the RG-1 register. The officers thereafter scrutinised the pledge register and RG-1 register and found that the manufactured articles shown in the Bank pledge register, as compared to the entries in the RG-1 register, both of Hindustan Boilers as also of the present appellants, were much more On further scrutiny, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and passed the impugned order. 3. Shri B.B. Gujral, the learned advocate for the appellants, pleaded that the goods found were not in fully manufactured condition and submitted that these goods have no general market and that only the Government and major industrial houses purchase the product. He submitted that as per the terms of contract and purchase order the product is subject to the test by the consumers and that till the test was made and product was approved by the consumers, the same was not ready for delivery and as such cannot be considered as manufactured so as to fall within the purview of Sec. 2(f) of the Act. In support of his contention, the learned advocate also took us through some of the contracts and purchase orders to substantiate his contention that the goods cannot be taken to have been manufactured till approved by the purchaser and hence remain to be unfinished goods. The learned advocate cited before us, the decision of the CEGAT in Collector of Central Excise v. General Cement Product, reported in 1989 (39) E.L.T. 689 (Tribunal) = 1989 (21) ECR 222 and also cited the decision of the Supreme Court in Tata Iron and Steel Company Ltd. v. Union of India, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... register and the bank pledge register did give rise to a strong presumption and reasonable conclusions as to the clandestine removal. He also submitted that the goods seized were fully manufactured goods as they were found in packed condition duly marked and were ready for despatch. In his submission, these goods were completely manufactured products. He submitted that non approval of the goods by the customer did not take them away from the purview of the definition of manufacture as given under Sec. 2(f) of the Act. The goods seized being fully manufactured were required to be entered in the RG-1 register and that admittedly they were not so entered in the RG-1 register. He also submitted that there was a wilful suppression on the part of the appellant and that the extended period was rightly invoked by the Collector. In support of his contention he cited the decisions reported in 1988 (36) E.L.T. 497 and 1988 (35) E.L.T. 388. 5. The questions that arise for our determination can be identified as :- 1. Whether the goods found from the premises, including those, found to have been hypothecated to the Bank, but lying in the same premises in a room under the control of the ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd., Nuclear Power Corporation of India Ltd. and others, and also referred to and relied upon the decision of the CEGAT Special Bench-BI in Collector of Central Excise v. M/s. General Cement Products Pvt. Ltd., reported in 1989 (39) E.L.T. 689 (Tribunal) = 1989 (21) ECR 222 and of the Supreme Court in Tata Iron and Steel Co. Ltd. v. Union of India and Others, reported in 1988 (35) E.L.T. 605 (SC). 9. The CEGAT Special Bench B-I, in its order in Collector of Central Excise v. M/s. General Cement (supra) had before it, the question whether the cement concrete poles meant for supply to UP State Electricity Board could be taken as manufactured and considered fit for delivery before they passed the prescribed quality control test, and it was held that they could be treated as manufactured only after they passed through the prescribed quality control test. There was however a specific requirement in the contract that before the goods could be considered as fit for delivery, they had to undergo various tests till they break in testing process, and for that purpose, one per cent of poles were being selected at random and sent for testing. It appears that the poles were tailor made f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditions signed by Joint Director, Purchase and Stores, Department of Energy, Govt. of India. Our pointed attention was drawn to Paras 5.2.4 of the said terms, which reads thus : 5.2.4. In addition to the tests performed by the supplier, the purchaser shall have the right to ask for additional inspection or testing as he deems necessary and the additional cost for such tests will be borne by the purchaser. Reading of the same does not impress upon us as indicating that the goods produced were subject to testing and approval before they can be branded as manufactured , so as to fall within Sec. 2(f) of the Act. The process of manufacture was not subject to the said condition nor could the goods be deemed as manufactured to the specification. Reading of the other purchase orders, also does not show that the manufacture of goods was subject to approval or that the goods were required to be manufactured as per the set specification . 13. It was also argued that the appellants had a restricted market, and they had to produce the goods, which were always subject to test by the purchaser. Besides our holding as above, that the conditions were of general nature, not attribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their irregularity in not making entry in RG-1 Register. 17. Before concluding on this point, it may be noted that the plea of the appellants, in pleading that the goods found were not fully manufactured is based only on the ground that the same were not tested by the prospective buyers. No other ground for treating the same as not fully manufactured has been pleaded. Under the circumstances, vide our finding as above, we hold that the plea raised is not acceptable, and when the department has shown the said goods as duly manufactured, and for which there is no other objection, we hold that the appellants had with them the seized goods, duly manufactured, and not accounted for in RG-1 register. 18. The second set of allegations is that, there was a manufacture and clandestine removal of goods, without entry in RG-1 register and without payment of excise duty by M/s. Hindustan Boilers, the appellants as they were formerly known, as also by the present appellants. 19. The allegation is based principally on the ground that on verification of the bank pledge register and RG-1 register, there was a wide range of discrepancy in the manufactured product shown. Undisputedly, the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as however ordered redemption thereof, on payment of fine of Rs. 3,00,000/-. Total value of the attached goods is about Rs. 9,92,245.80 ps. In our view, the same, in the present set of circumstances, appears to be on little higher side, as compared to the violation of the Rules, proved. The proved violation of Rules is reported to be on long standing practice and no clandestine removal is proved. We, therefore, feel that the redemption fine be reduced, and hence direct that the redemption fine be reduced from Rs. 3,00,000/-to Rs. 50,000/- (Rupees Fifty thousand only). 25. The appellants have also been imposed with personal penalty of Rs. 2,00,000/- (Two lakhs only). This penalty is imposed on account of the Collector holding both the charges, namely non-accounting in RG-1 Register and clandestine removal and resultant evasion of duty to the tune of more than Rs. 4.00 lacs. However, in view of our findings as above, evasion of duty and clandestine removal has not been established and as such the gravity of the action of the appellants gets considerably reduced. In our view the penalty of Rs. 25,000/- should be sufficient. 26. The Collector has also ordered confiscation of plant ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
