P.K. Desai, Member (J)

1. This appeal is directed against the order in Original No. 21/MP/89, dated 9-5-1989 passed by the Addl. Collector, Central Excise, Vadodara.

2. The Appellants are engaged in manufacturing/producing man-made fabrics falling under T.I. 22 of the First Schedule to the Central Excises and Salt Act, 1944 and hold L-4 licence. On 23-8-1984 the officers of the Central Excise (Preventive) Collectorate visited the factory premises of the Appellants and during the same noticed certain quantity of fully manufactured man-made fabrics duly packed and in marketable condition at various places like Bonded Store Room, Folding and Packing Section, without being entered into statutory registers. It was also reportedly noticed that the Appellants were not even maintaining lot Register prescribed by the Baroda Collectorate vide Notification No. 1/75 dated 4-1-1975. The officers, therefore, seized the said unaccounted stock but released the same subsequently on execution of B-ll Bond by the Appellants. On recording of the statements of the persons concerned, it was felt that the Appellants had contravened the provisions of Rule 173 G(4) read with Rules 53 and 226, as also of clause (a) and (d) of sub-rule (1) of Rule 173Q of the Central Excise Rules, and hence a notice to Show Cause was issued calling upon the Appellants to show cause why the goods seized should not be confiscated and why the duty amounts should not be recovered vide Section 11-A of the Act read with Rule 9(2) of the Rules and why penalty should not be imposed vide Rule 173Q of the Rules. The Appellants filed their reply dated 7-5-1985 to the said Show Cause Notice where, denying the allegations, they contended that the delivery of the goods was always effected in packed boxes and that entries in RG-1 register were duly made at that time only and that they did not consider fabrics packed in cellophane bags/rolls as "ready for delivery" and that said practice was being followed since long without any objection from the officers of the Excise Department stationed at Surat, within whose jurisdiction the factory premises fell, and who often visited and periodically checked the same. As pleaded by the Appellants, the production was duly reflected in the private accounts maintained by them and that there was no intention to suppress any thing. As regards non-maintenance of the Lot register, required to be maintained vide Baroda Collectorate Notification No. 1/75, dated 4-1-1975, the Appellants pleaded that, as there were some practical difficulties in maintaining such a register, they had made a representation to the Board but the Board directed them to approach the Collector of Central Excise, Baroda. As such, the Appellants pleaded, the Department was fully aware that the Lot-Register was not maintained pending decision on their representation and that even then, no objection was raised. In their submissions, therefore, though these were some breach of the provisions of the statute, there was no mala fide attached and that the same were never considered objectionable, even by the Department and the Dept. acquiesced, and as such there was no ground for either confiscation or for imposition of penalty and that the duty would be paid as and when the goods were taken out of the factory premises.

3. In the adjudication proceedings that followed, the Appellants cross-examined some of the Departmental officers posted at Surat during the relevant period to substantiate their contentions. The Adjudicating Authority however negatived their contentions and ordered confiscation of the seized goods, but as they were released on execution of B. ll Bond, and furnishing the Bank Guarantee, ordered encashment of the said Bank Guarantee which was for Rs. 7,64,031.00, and also imposed personal penalty of Rs. 5,00,000/- and further directed that the duty amount of Rs. 2,95,140.53 be recovered if not already paid.

4. Mr. K.S. Nanavati, Ld. Advocate for the Appellants submitted th