TMI Blog2014 (6) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner (Appeals), Revenue has filed the present appeal. We have heard Shri Bharat Bhushan, ld. AR appearing for the Revenue and Shri K.K.Anand, ld. Advocate appearing for the respondents. 2. M/s Ganpati Rolling P. Ltd. are engaged in the manufacture of copper wire rods falling under Chapter 7408 of the Central Excise Tariff Act, 1985. Shri Manoj Kumar Jain is Director of the said manufacturing unit. 3. The premises of M/s Ganpati Rolling P.Ltd. were put to search by the officers of DGCEI on 22.02.04. On verification of the stock, it was found that the raw materials and the finished goods were in excess of the quantity recorded in the statutory records. The same were accordingly put under seizure by way of a Panchnama dtd. 22.02.04. 4. Statement of Shri Lalji Dubey, Manager was recorded on the same date wherein he deposed that the records maintained by them in the shape of raw materials stocks register, PLA Cenvat register are not available in the factory. The respondent produced the said records subsequently for the provisional release of the goods after completing the records. Statement of the respondent s accountant Shri Raghunandan Aggarwal was recorded wherein he depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlac Ltd. reported in 2004 (177) ELT 1114 (Tri.). To the similar effect is the decision of the Tribunal in the case of Dincotex P.Ltd. reported 1999 (107) ELT 326(Tri.). By following the said decisions, he set aside the confiscation of raw material. We find that the law on the above issue stands settled by various decisions, some of which stands referred to and relied upon in the impugned order of Commissioner (Appeals). Revenue has referred to the Tribunals decision in the case of Patel Products reported in 2003(151)ELT650(Tri.-Del.) wherein duty demand on the raw material found short was upheld against the assessee. We find that the ratio of the above decision is not applicable to the facts of the present case in as much as no duty stands confirmed against the respondents on the case of short found raw material. In fact the allegations are that the raw material was not entered in the statutory records and as such was in excess than the balance reflected in the statutory records. As such we find no justifiable reasons for confiscation of seized excess found raw material. 8. As regards, the confiscation of the excess found final product, we find that Commissioner(Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not account for has to be interpreted. Mere non-entry in RG 1 records will suffice for holding that the goods have not been accounted for by the manufacturer. After all such huge production requires equally huge consumption of raw materials. There would be production slips or other documentary evidences at the intermediate stage. There is nothing on record to show that the said raw material, out of which final products stands manufactured by the respondent, were not reflected in the records neither is there any allegation to that effect. If the same were reflected in the raw material records, it cannot be held that the finally manufactured goods were not accounted for by the respondent. If the said goods are part of the regularly manufactured goods by the respondents, the mere fact of their non-entry in RG 1 would not call for their confiscation. The Tribunal s decision in the case of Bhilai Conductors P. Ltd. referred (supra) makes it very clear that there need to be a malafide intention on the part of the manufacturer to clear the goods clandestinely. Such malafide intention has to be arrived at from the evidences collected by the Revenue. The mere fact of non-entry which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plained later. These are radical results with serious consequences. So it may be proper to consider these conclusions in the context of the relevant rules and facts of this case. 15. Let us first consider Rule 10 of the Central Excise Rules which reads as under: Rule 10. Daily stock account. - (1) Every assessee shall maintain proper records, on a daily basis, in a legible manner indicating the particulars regarding description of the goods produced or manufactured, opening balance, quantity produced or manufactured, inventory of goods, quantity removed, assessable value, the amount of duty payable and particulars regarding amount of duty actually paid. (2) The first page and the last page of each such account book shall be duly authenticated by the producer or the manufacturer or his authorized agent. (3) All such records shall be preserved for a period of five years immediately after the financial year to which such record pertain. 16. This Rule is explicit enough to state that daily stock account need to be maintained on daily basis and not when a person engaged for writing the account pleases to do so. The register maintained for accounting the finished product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision in the case of Pepsi Foods Vs. CCE-2002 (139) ELT 658 (Tri.-Del.) may be seen. (iii) The expression excisable goods used in clause (c) will not cover goods on which excise duty has been paid. So it will not apply to raw materials.-See para 5 of Saboo Berlac Ltd.-2004 (177) ELT 1114 (Tri) 19. Reasons why conclusion at para 18 (i) above is not correct. 19.1 The proposition at para 18 (i) above does not appear to be correct because the Apex Court has recognized the principle of statutory penalty in the case of UOI Vs. Dharmendra Textiles-2008 (231) ELT 3 (S.C.) wherein the Court held that where the statute prescribes a penalty without reference to intention to evade duty such penalty is to be imposed without regard to mensrea. So the argument that for imposing any penalty, mensrea has to be first proved is not correct. In the light of this decision there is no reason to presume that the expression intent to evade payment of duty used in clause (d) is applicable to other clauses also. Such reading would imply that the requirement under Rule 9 of the Central Excise Rules that a manufacturer of excisable goods should register with Central Excise department also is rend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gument comes up that the goods in question were not fully finished. Mostly the argument is accepted. But that can be only in situations where the goods are otherwise accounted for by the party, that is the presence of the goods are evident from entries in other registers and non-accounting is either due to a simple error or due to difference in understanding as to when the goods becomes finished goods. But if the presence of the goods is not entered in any records maintained in the usual course of business, the goods are clearly liable to confiscation under Rule 25 (b). That is the reason why the expression with intent to evade payment of duty is not included in this clause. So cases where the goods are not entered in registers are to be judicially examined to see whether the omission to enter it in one of the registers is explainable. The reason given in this case that the persons writing account comes only once in a while and he writes account as and when he comes is not an explanation that can be accepted in this context. In my view, in this case the explanation given for such non-recording is not acceptable to satisfactorily account for the goods. 21. Reason why the conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 24. There are decisions of higher Courts contrary to the above argument. The following decisions may be seen. (i) S.K. Packs (P) Ltd. Vs. CCE-2012 (276) ELT 186 (P H); (ii) CCE Vs Rajhans Silk Mills-2011 (268) ELT 327; 25. I note that the decision of the Tribunal in Bhilai Conductors P. Ltd. reported in 2000 (125) ELT 781 was strictly not a decision of the Larger Bench as observed by Member (Judicial) but a decision of majority of the Members arising due to difference in view between two Members who originally heard the matter. I also note that the High Court of Punjab and Haryana has called for reference on questions of law involved in the case of Pepsi Foods Vs. CCE-2002 (139) ELT 658 (Tri. - Del.) relied upon by Member (Judicial). 26. I am of the view that the argument given in para 7 of the order of the Member (Judicial) for distinguishing the decision in the case of Patel Products also need to be seen in a slightly different perspective. It is true that in this case there is no demand of duty on raw materials found in excess. In fact such demand cannot be made in the hands of the appellant so long as they have not taken Cenvat credit and removed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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