C.C.E. & S.T. Meerut-I vs M/S. Rana Paper Ltd

[Arising out of Order-in-Appeal No. 250-CE/MRT-I/2012 dated 27.08.2012 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Meerut].

For approval and signature:

Honble Shri Ashok Jindal, Member (Judicial)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

C.C.E. & S.T. Meerut-I .Appellants

Vs.

M/s. Rana Paper Ltd. .Respondent

Appearance:

Shri R.K. Mishra, DR for the Appellants

Shri Anutosh Pandey, Advocate for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing: 04.02.2015

FINAL ORDER NO. 50310/2015-EX(SM)

Per Ashok Jindal:

Revenue is in appeal against the impugned order wherein the Ld. Commissioner (A) held that seized goods are not liable for confiscation and set aside the penalty imposed under Rule 15 of the Cenvat Credit Rules, 2004 read with section 11(AC) of the Act and a penalty of Rs.5000/- was confirmed under Rule 27 of the Central Excise Rules, 2002.

2. The facts of the case are that on 06.07.2010 the factory of the respondent was visited by the investigating team. On verification of the stock lying in their factory it was found that there was a shortage of raw material to the tune of 58.974 Metric Tonnes and there was excess of finished goods lying in their factory unaccounted of 71.475 Metric Tonnes of Ms Ignots and 1.605 Metric Tonnes of runners & risers. The explanation for shortage of raw material and excess of finished goods was sought which respondent failed to explain. Therefore, the show cause notice was issued to the respondent. Alleging that the shortage of raw material is due to clandestine removal of the inputs and excess stock unaccounted in their records is for the clandestine removal of the goods without payment of duty. The Show cause notice was adjudicated. Demand on duty of shortage of inputs and excess of finished goods were confirmed along with interest and penalties were imposed on the respondent. In appeal before Ld. Commissioner (A), the demand on account of shortage of raw material was confirmed but penalty was dropped for excess of raw material the demand was dropped and a penalty of Rs.5000/- under Rule 27 of Central Excise Rules, 2002 was confirmed. Revenue is aggrieved from this order and therefore revenue is in appeal.

3. The Ld. AR submits that on 15.05.2010 the respondent intimated to the department they are closing their unit and same is closed since 15.05.2010 but when they visited their factory on 06.07.2010 the factory was running and shortage of raw material / excess of finished goods unaccounted were found there. Therefore, the onus is on the respondent to explain the shortages / excesses of the goods which they have failed to do with any evidence. Therefore, the Ld. Commissioner (A) rightly confirmed the demand on shortage of raw material and have wrongly dropped the demand on excess finished goods found in their factory. He further submits that the intent of the respondent is very much clear from their declaration on 15.05.2010 that they are going to close their factory and on visit it was found running. In these circumstances, the seized finished goods are liable for confiscation and can be redeemed on payment of fine. Penalty on the respondent is also imposable.

4. On the other hand the Ld. Counsel of the respondent submits that in this case the only allegation against the respondent is that the excess of finished goods is due to non accountal thereof and Ld. Commissioner (A) relying on the decision of this Tribunal in the case of Kamikhya Alloys Pvt Ltd . Vs. C.C.E. Lucknow-2011 (267) E.L.T. 97 (Tri-Del) dropped the demand and confiscation of the goods and the penalty under rule 27 of the Central Excise Rules, 2002 was confirmed to the tune of Rs.5000/-. He further submits that the stock taking was done on estimation basis. Therefore, the stock taking is not correct. In these circumstances, he prayed that appeal be dismissed.

5. Heard the parties. Considered the submissions.

6. In this case the fact that factory was closed on 15.05.2010 was intimated by the respondent to the department is correct. The respondent could not inform to the department when they started production again but at the time of visit on 06.07.2010 the factory was found running which shows that the respondent was involved in the activity of clandestine manufacture of goods and clearing thereof without payment of duty without accounting them in their books of accounts. Therefore, I do not agree with the contention of the Ld. Commissioner (A) that it is the case of mere non accountal of goods in their statutory records. Considering the conduct of the respondent, I hold that excess stock found during investigation was meant for clandestine clearance without payment of duty. In these circumstances, I hold that goods are liable for confiscation. The same can be redeemed on payment of redemption fine. I find that in this case the total duty component works out to Rs. 1.61 lakhs but redemption fine is imposed to the tune of Rs.4 lakhs which is excessively very high. Therefore, I reduce the redemption fine to Rs.50,000/- As intent of the respondent is very clear, therefore, I confirm the penalty imposed by the adjudicating authority appropriate. To conclude the discussion, following orders are passed:

(a) Goods are liable for confiscation. Same can be redeemed on payment of redemption fine of Rs.50,000/-.

(b) Penalty of Rs.1 Lakh on the respondent under Rule 25 of the Central Excise Rules 2002 read with section 11 (AC) of the Act is confirmed.

Appeal is disposed off in the above terms.

(Dictated and pronounced in the open court)

(Ashok Jindal) Member (Judicial)

Bhanu

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E/3977/2012-EX(SM)