TMI Blog2015 (8) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... w. Goods were found excess were not in complete finished condition as these goods were not packed and could not be entered in the statutory records. This fact has not been examined at the time of investigation. Therefore, the defence taken by the respondents is acceptable in the absence of corroborative evidence. Therefore, I do agree with the finding of the learned Commissioner (Appeals) that goods are not liable for confiscation. Accordingly, the proposal of confiscation of goods is set aside. Consequently, penalty, redemption fine are not imposable on the respondent. - no efforts were made by the revenue to reveal the truth by examining the manufacturing process to ascertain the raw material consumed and resulted output. Therefore, I hold that charge of clandestinely removal of goods is also not sustainable against the respondent in the absence of any contrary evidence against the respondent. - No infirmity in the impugned order, the same is upheld - Decided against Revenue. - Excise Appeal No. 58100 & 58366 of 2013 - Ex (SM) - Final Order Nos. A/ 51392-51393 /2015-Ex(SM) - Dated:- 22-4-2015 - Hon ble Mr Ashok Jindal, Member (Judicial),J. For the Appellants Shri R K M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (RG0-1 register) were not maintained up to date, the discrepancies, if any, could not be immediately worked out. Therefore, the entire stocks of finished goods were placed under detention pending verification thereof with the updated Central Excise records to be produced by M/s. ASC-II. Subsequently M/s. ASC-II produced the updated RG-I register (Computer Print out) for the month of March, 2009 and the stock position as physically verified was reconciled with the same. As a result thereof, stocks of various types of laundry soaps, toilet soaps and detergent powder valued at ₹ 60,97,401/- (MRP ₹ 79,42,340/-) involving Central Excise duty of ₹ 5,02,426/- were found in excess of the recorded balance in their RG I register and hence the detention thereof was converted into seizure vide letter dated 24.4.2009 in terms of provisions of Section 110 of Customs Act, 1962, as made applicable to like matters of Central Excise vide Notification No. 68/63-CE dated 04.05.63, as amended, on the reasonable belief that the same were intended for clandestine removal and hence liable for confiscation. 3.3 In order to confront M/s. ASC and M/s. ASC II with the discrepancies detec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. ASC and M/s. ASC II vide F. No. IV(6) LRU/INV/07/2009/285 dated 29.03.2010. 4. The adjudicating authority decided both the show causes vide the impugned order wherein the adjduciating authority confirmed the demand of Central Excise duty amounting to ₹ 5,72,501/- against M/s. Amrit Soap Company, Jalandhar Bye Pass Chowk, Ludhiana under proviso to Section 11A(1) along with interest under section 11 AB of the Central Excise Act, 1944; imposed a penalty of ₹ 5,77,501/- against M/s. Amrit Soap Company, Jalandhar Bye Pass Chowk, Ludhiana under Section 11AC of the Central Exciswe Act, 1944 read with Rule 25 of Central Excise Rules, 2002; confirmed a demand of ₹ 157,85,226/- against M/s. Amrit Soap Company (Unit-II), Village Mandiani Mullapur, Ludhiana under proviso to Section 11A (1) alongwith interest under Section 11 AB of the Central Excise Act, 1944 imposed a penalty of ₹ 17,58,226/- against M/s. Amrit Soap Company (Unit II) Village Mandiani, Mullapur, Ludhiana under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rule, 2002; confiscated the goods seized from M/s. Amrit Soap Company (Unit II), Village Mandiani, Mulla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared without payment of duty. The basis of this allegation is that appellant is manufacturing the batch of 1200 Kgs and on the statement of Shri Rajesh Gupta, partner who stated that for every batch of 1200 Kgs., 100 Kgs soap has been clandestinely manufactured and removed. To counter this allegation, he submits that the raw material is only 840 Kg for the said batch and from the raw material of 840 Kg. how the goods of the weight of 1200 Kg, finished goods can be manufactured. Moreover, the respondent made a proposal to the adjudicating authority to appoint two independent officers in whose presence the respondent shall produce soap with same ingredient and same quantity of raw material as stated by Shri Rajesh Gupta and the outcome of these ingredients on production of goods would not be 1200 Kg of finished goods. In these circumstances, when the respondent themselves offered to inspect the manufacturing process and same has not been accepted, therefore allegation is not sustainable in the absence of any evidence on record for procurement of raw material, electricity consumption, transportation of goods etc. Therefore, learned Commissioner (Appeals) has rightly observed and set a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or a registered dealer, as the case may be, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or [two thousand rupees], whichever is greater. An order under sub-rule (1) shall be issued by the Central?(2) Excise Officer, following the principles of natural justice. c. From a plain reading of the above it is clear that as per the said Rule 25(b) goods are confiscated when the manufacturer (b) does not account for any excisable goods produced or manufactured or stored by him . The meaning of the expression account for in the said Rule is important to confiscate the goods. The expression account for in the said Rule is important to confiscate the goods. The expression account for was discussed by the Hon ble CESTAT in the case of Pepsi Foods vs. CCE [2002 (139) ELT 658 (CEGAT) as under: 10 .Even apart from the above observations of the? Tribunal regarding the requirement for mens rea, we feel that Rule 173Q(b) can not take in accounting failure simplicitor. This is clear from the language of the sub-rule itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (S.C.) = 1986 (162) ITR 846 (S.C.) has explained the concept of process in excise law. In view of the principle laid-down therein and other relevant decisions, processes incidental or ancillary to packing are to be included in the process of manufacture; manufacturers in the sense of bringing the goods into existence as these are known in the market, is not complete until the detergent powder is packed in suitable packs [refer Collector of Central Excise, Calcutta v. East End Paper Industries Ltd. 1989 (43) E.L.T. 201 (S.C.) = 1990 (186) ITR 105 (S.C.)]. The above said decision was maintained by the Hon ble Supreme Court vide [2003 (157) ELT 255 (SC]). Similar, decisions were also delivered in the case of CCE vs. Ashyan Vanaspatic Industrial P Ltd. [1996 (85) ELT 53 (CEGAT), Kashmir Vanaspati Ltd. vs. CCE[1996 (85) ELT 150 (CEGAT) and Tide Water Oil vs. CCE -1999 (105) ELT 669 (CEGAT). 8. I do agree with the observations of the learned Commissioner (Appeals) and as contended by the respondent that the goods were found excess were not in complete finished condition as these goods were not packed and could not be entered in the statutory records. This fact has not been examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when it was necessary to conduct investigations from all the buyers to quantify the receipt of goods from each buyers period wise to prove and quantify the clandestine removal thereof. Even the above statements do not mention the fact that the said buyers had received the goods without payment of duty. Therefore, no case has been made out. g. I find that in order to prove the allegation that the appellants manufactured unaccounted excisable goods and removed them clandestinely without payment of Central Excise duty, the adjudicating authority has held in para 4.7 of the impugned order as under:- I further observe that on scrutiny of the records of the Noticee by the DGCEI, it was noticed that prior to March, 2006, when laundry soap was exempted from duty, the Noticee had been using various oils, such as Castor Oil, Crude Palm Oil, Palm Fatty Oil and Rice Bran Oil Fatty Acid in the manufacture of laundry soap. However, from March, 2006onwards i.e. immediately after imposition of duty, the Noticee stopped showing consumption / purchase of any oil other than Palm Fatty Acid Oils i.e. Cenvatable input unlike rice Bran Oil Fatty acid and castor oil, which were non dutiable inputs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the same Herbal Soaps and Detergent Handbook which the adjudicating authority has referred to, I find the following entries at Page 31-32 Formulation of oil blewnds for soaps While formulating oil blends for Laundry or toilet soaps the following important criteria should be considered:- 1. Choice of oils and fats available for making soaps. 2. Iodine value, titre and fatty acid composition of constituents oils and fats 3. Facilities available for pre-treatment and upgrading of oils. 4. Price of oils. 5. Rebates allowed by the government for usage of certain minor / non traditional oils in soapmaking. 6. Equipment available for soap making. 7. Requirement of quality of soap in terms of colour, odour, consistency, lather, rate of wear, smoorthness, surface finish, cracking tendency, frittiness and others. Iodine value, titre and fatty acid composition Iodine value of an oil indicates consistency and stability of the resulting soap. Titre gives similar information except in the case of hydrogenated castor oil, where the Titre value is high but the soap may not be as hard as is dictated by this value. Hydroxy acid is a major component of castor oi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, rice bran fatty acid 80kg. castor oil 20 Kg.soap stone 60Kg. sodium silicate 90 Kg and dolomite 90 Kg was mixed. The total of these items comes to 840 Kg. The adjudicating authority has not explained how 1200 Kgs. of laundry soap was obtained uniformly in all varieties of laundry soaps manufactured by the appellants. The adjudicating authority appears to have based his findings only on the statement of Mr. Rajesh Gupta. The adjudicating authority has not explained in the impugned order what qualifications the said Rajesh Gupta had and why an expert opinion was not obtained in the matter. j. Further, I find that the adjudicating authority has not brought out in the impugned order how goods were removed from the factory premises of M/s. ASC and M/s. ASC-II and the said buyers received them and how much quantity each buyer received and quantum of payment made by each buyer. Based on the above facts, the charge of clandestine removal falls flat and is not supported by the facts as above and the case fails as a consequence. 10. I have gone through the above observations of learned Commissioner (Appeals) and found no fault in the same. Further, I find that no efforts were made b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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