Per S.L.Peeran: This appeal arises from the order dated. 21.9.95 passed by the Collector (Appeals), Allahabad. By this order, the Collector (Appeals) confirmed the confiscation and granting option to release of the seized goods on payment of redemption fine of Rs. 40,000/- and penalty of Rs. 2,000/- imposed under Rule 226 of the Central Excise Rules, 1944.

2. The facts of the case are that on an information that the appellants are indulging in suppression of production of excisable goods and clandestine removal thereof a team of Central Preventive Officers headed by Supdt (CP) visited the factory premises of the party on 10.7.94 and conducted physical stock verification of the finished goods as well as raw materials. On physical verification a quantity of 7.410 MT of balls and cylpebs of alloy steel valued at Rs. 1,85,250/-involving central excise duty to the tune of Rs.27,787.50 was found in excess of the recorded balance in RG-1. A physical verification report to this effect was prepared on the spot which was duly signed by the General Manager (Works) of the factory. The said General Manager (Works) in his statement dated 10-7-94 admitted about the discrepancy and attributed the same due to the negligence of his employees while counting a number of the casting of alloy steel. As the Explanation was not found satisfactory, the officer on their own reasonable belief that the aforesaid quantity of 7.410 MT of casting of Alloy steel found in excess of the recoded balance of the RG-1 was manufactured and stored for clandestine removal with intent to evade payment of Central Excise duty and was therefore, seized the same under a Punchnama dated 10-7-94 on the ground that the same is liable to confiscation for contravention of the provisions of Rules 53,173G and 226 of the Central Excise Rules. Thus the show cause notice was issued calling upon them to explain as to why the goods should not be confiscated under Rule 173Q of the Central Excise Rules and why penalty would not be imposed under Rule 173Qand226of the Central Excise Rules, 1944.

3. The assessee submitted a detailed explanation denying that the goods were meant for clandestine removal. They had submitted that the officers had conducted weighment of various pieces of different weights as per 32 serial numbers resulting in total weight of weight of 48.036 MT. This weight was ascertained by the officers by weighing one piece of each of the 32 items. For examples, against SI. No. 1, out of 177 pieces, the weight of one piece had been arrived at as 52 kgs. against SI. No.2, out of 13 pieces, weight of one piece had been arrived at as 47.5 kgs. and so on. They had stated that no weighment sheet/chart in respect of the weighment of each piece of the 32 si. numbers had been made out, in support of the total weight of 48.036MT allegedly found short by the officers. They stated that physical stock verification report dt. 10.7.94 the stocks from si. No. 2 to si. No. 8 were found in agreement when compared with the opening balance of 10.7.94. Therefore, they stated that the department had adopted two standards in the case of finished goods. Therefore, they disputed about the excess of 7.410 MT is arbitrary and is not correct. They also submitted that no confiscation and fine could be leviable as the goods were not meant for clandestine removal and they were all found in the bounded storeroom. In this regard, they also relied on several judgments. The Assistant Collector has noted all their pleas including the judgments cited. However, he has dealt with their contention, and held that there was excess of 7.410 MTs of castings of alloy steel without accounting in the statutory records contravening the provisions of Rule 53,173G and 226 of Central Excise Rules, 1944. In this regard, he has also taken into consideration the statement of the General Manager. He has held that the goods had been manufactured on the specific orders of the customer as per specific drawings and therefore, q