TMI Blog2006 (2) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... c. and holds Central Excise License since July, 1993. The main raw materials used by the appellants in its plant are aluminium sheets/coil, GP steel sheets/coils, paint and chemicals including isocyanate and polyols. The aluminium sheets/coil and GP steel/coil are first cleaned with chemicals and thereafter colour coated coils are inspected by the quality control department graded depending upon the finish achieved. Such colour coated coils are either cleared on payment of duty after being finally packed and weighed or are capitvely consumed in the plant by transferring the same to either of the following two lines : (a) cut to length line. (b) Profiling line. i.e. Trapezoidal sheet line in cut-to-length line, the colour coated coil is, cut into sheets or required length and/or width, as per customer s requirements or the requirements desired for producing sandwich panels. The cut to length colour coated sheets are either cleared on payment of duty after quality control checks, final packing and weighment or are used capitvely for manufacturing sandwich panels. In the profiling line, colour coated coil are further processed for making trapezoidal sheets. After shap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared to be shortage in stock of manufactured products to the extent of 1075.822 MT and taking the said quantity as clandestinely removed, the appellants had evaded duty amount to the extent of Rs. 88,99,987/-. (iii) that on verification of production records as also the scrap as shown as generated in the process of production, and it was taken that the finished goods were removed in the guise of scrap and because there was no duty difference for finished goods, and scrap, there was no duty evasion, however, there was an element of undervaluation and the goods in the guise of that being scrap, were undervalued and thus duty amounting to Rs. 36,89,419/- was evaded. 4.1 Commissioner of Central Excise, Pune, vide Order No. 11/98 dated 23-3-98 confirmed demand of Rs. 86,99,087/- in respect of 1075.822 MT on colour coated product alleged to be clandestainely removed between the period of 92 to 93 and 22-4-96 the demand of duty of Rs. 36,89,419/- for removal of Aluminium finished products etc. as scrap during the period 92-93 to 9-5-1996 and from 1-4-1996 to 24-4-1996 was confirmed. The Commissioner also ordered confiscation of the said GP colour coated products seized and valued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly in view of the fact that no material was shown to us to show that the RG1 stage was declared or specified by a Public Notice at a time after the goods come into existence within the factory premises. In this view of the matter we would set aside the order of confiscation and the redemption fine and allow this appeal. 5.2(a) The remand earlier was ordered essentially to enable the Commissioner to record his findings on plea that non-recording of production in the RG1 register was in line with the Steel Industry s practice of recording such production, just prior to the removal, particularly when goods were both a final product as well as an intermediate product. Even though appellant led evidence was led before the Commissioner to prove the existence of such a practice in the Steel Industry, no specific finding disputing the existence of the said industry practice has been recorded by the Commissioner, even though the Tribunal had, while remanding the matter back to him specifically directed him to go into this aspect of the matter and then decide the case. Except for founding faults with the language of the affidavits produced, Commissioner has made no efforts to ascertain t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The order of confiscation is therefore clearly unsustainable in law 5.4(c) It was submitted that the impugned order of the Commissioner proceeded on an erroneous interpretation of the expression account for as appearing in sub-rule (b) of Rule 173QA reading of the impugned order, particularly paras 15 and 20 makes it evidently clear that the Commissioner has equated the said expression account for as referring to recording of production in the RG1 register. The said expression was actually synonymous with explaining or answerable . Reliance in this regard was placed upon the decision of the Tribunal in the cases of CCE v. Continental Chemicals, 2002 (140) E.L.T. 116 (T.) = 2001 (46) RLT 850; Pepsi Foods v. CCE, 2002 (139) E.L.T. 658 and Nilesh Textiles Pvt. Ltd., 2003 (162) E.L.T. 553. In particular, attention was invited to the following observation of the Tribunal in the case of CCE v. Continental Chemicals which decision has been followed subsequently in the remaining two cases cited above. The ground in the appeal is that the provisions of Rule 173Q would be attracted for the reason that the goods were not accounted for in the R.G.1 register. Clause (b) of Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt vide its judgment dated 25-9-2000. It was therefore submitted that since the allegation regarding clandestine removal of goods in the past has been set aside by the Supreme Court finally, there was no basis left for the department to allege mala fides or any intention to evade payment of duty against the appellant. This is the reason why the Commissioner himself had not chosen to impose any penalty, even though he had ordered confiscation and imposed redemption fine. As such, even if the appellant s submission regarding existing the Industry Practice was rejected, the present case was only one of improper maintenance of the RG1 register as a result of non-entering of the production therein which could, at the highest, have attracted the provisions of Rule 226 and not Rule 173Q. We find force in this submission 5.3(a) The ld. DR. submits the judgment of the Supreme Court in the case of Amrit Foods v. CCE was per incuriam as it had not taken into account the earlier judgment of the Supreme Court in the case of State of Bihar v. Kalika Singh, 2003 (1) SCW 2458, CCE v. Pradyumna Steels Ltd. 1996 (82) E.L.T. 441 and N.B. Sanjana v. the Elphinston Spng. Wavg. Mills Co. Ltd., 1978 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said provision shows that the breach of the provision of the Act has not been made penal or an offence and no power has been given to confiscate the goods. It only provides for application of the procedural provisions of the Central Excises and Salt Act, 1944 and the rules made thereunder. It is no longer res integra that when the breach of the provision of the Act is penal in nature or a penalty is imposed by way of additional tax, the constitutional mandate requires a clear authority of law for imposition for the same. Article 265 of the Constitution provides that no tax shall be levied or collected except by authority of law. The authority has to be specific and explicit and expressly provided. The Act created liability for additional duty for excise, but created no liability for any penalty. That being so, the confiscated proceeding against the respondents were unwarranted and without authority of law. 19. It is now a well settled principle of law that expropriatory legislation must be strictly construed (see M/s.D.L.F. Qutab Enclave Complex Educational Charitable Trust v. State of Haryana and ors., reported in AIR 2003 SC 1648). It is further trite that a penal st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis left for the department to draw an adverse inference against the appellant. (c) Further the decisions of the Tribunal in the case of Corona Cosmetics relied upon by Revenue were no longer good law as they have been rendered prior to Bhilai Conductors decision. (d) The decision of the Tribunal in the case of HGI Automotives (P) Ltd. also does not support the Revenue s case inasmuch as the learned single member who passed the said order observed in para 4 that if the goods found in excess were accounted for in the private records, the order of confiscation would not have been sustainable. In the present case, the private records of the appellants did not reflect production of the seized goods is not an issue. 1(f) With regard the submission of the ld. D.R. that the line of decisions referred to in Pepsi Foods case were not required to be followed merely because an appeal or reference against the said order was pending in the High Court. This cannot be accepted unless such an order is set aside or stayed by a competent Court, it remains in full force and has to be followed. (g) As regards the Supreme Court s judgment in the case of Gujarat Travancore v. CIT 1989 (42) E.L.T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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