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CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE TRIBUNAL, BANGALORE
G.A. BRAHMA DEVA, S.S. Sekhon, JJ.
Sunder Silk Mills (P.) Ltd. -Appellant
Versus
Commissioner of Central Excise, Hyderabad -Respondent
Final Order No. 1232/2002 Appeal No. E/121/2002, 1232 of 2002, 121 of 2002
Decided On : 17-09-2002
B. Pranesa,L. Narasimha Murthy
Per S.S. Sekhon :
The appellants are manufacturers of manmade fabrics (MMF). On 28.2.98, the officers on verification at the premises of the manufacture it was found that 1980 Mtrs. of sarees in finished goods which were not accounted and a shortage of 2378.10 Mtrs. of grey fabric and issued a notice. Assistant Commissioner passed an Order demanding duty amounting to Rs. 6,658 (BED Rs. 3,395 and AED Rs. 2663) being the duty payable on 2378.10 mtrs. of MMF processed sarees manufactured out of the quantity of grey fabric found short in the premises. This demand was made under Rule 9 (2) of Central Excise Rules 1944 read with Section 11 (A) of the Central Excise Act 1944 and Section 3 of Additional Duty of Excise (goods of special importance Act 1957) along with interest and penalty equal to duty of Rs. 6,658/- was imposed and 1980 mtrs of alleged MMF sarees not accounted were ordered to be confiscated on payment of redemption fine of Rs. 5,000/-. A penalty of Rs. 3,000/- was imposed on the Company and Rs. 1,000/- on the Director.
2. The Commissioner (Appeals) upheld the Order of the adjudicating authority by concluding that neither before the Assistant Commissioner nor before the Central Excise Officers who inspected the unit the plea of the excess stock of sarees found unaccounted to be the production of that day, was taken and satisfaction over the method of stock taking was exhibited. He also found that as regards shortage of grey fabric, the appellants could not satisfactorily explain shortage and therefore the presumption inevitablewas that the appellants manufactured sarees out of that grey and cleared the same without payment of duty.
3. We have heard the matter and considered the submissions and find:-
a) We find that there is no evidence to come to a positive conclusion that the appellants had manufactured sarees from the quantity found short of the grey fabric and have cleared the same without payment of duty. There is no corroboration for the same. The Commissioner (Appeals), has also come to a finding "the presumption is inevitable that appellant manufactured sarees".
No duty could be demanded on a 'presumption'. Therefore, we cannot uphold the demand of duty on the quantity manufactured on clearance of sarees, as arrived at by the lower authorities.
b) Since we can not confirm the duties of Rs. 6,658/-, we cannot confirm the penalty under Section 11AC of Rs. 6,658/- as arrived at by the Lower Authority.
c) Since the goods i.e. 1980 meters of 'MMF' sarees were found within the factory premises and there is force in the plea that it could be the production of that day, it's non-accountal in RG 1 could be considered to be satisfactorily explained. In the case before us, we find that the seizure of the said sarees is reported in running length. A saree would normally be cut to size and only thereafter entered in the RG I, was a plea that should have been considered by the Lower Authorities. In the absence of the same and in view of the catena of decisions, that mere non-accountal of the goods in the RG I will not render and cause for confiscation & visit of penalty under Rule 173Q. The confiscation as arrived at by the lower authorities and the penalty as arrived at is not upheld.
4. In view of our findings, the appeal is allowed.
