Sanjiv Khanna, J.@mdashOn 11th September, 2013, the following common substantial question of law was framed in these three appeals:
Whether there is error in the order of the Tribunal as it does adjudicate and decide the ground of appeal that the penalty and redemption fine have been calculated by including value of accounted for stock mentioned in RG-IV Register?
The appellants herein are associate companies/concern, which were subjected to search and seizure operations on 7th January, 2009. Thereafter, show cause notices were issued and orders-in-original were passed. The appellants filed first appeals but did not succeed and then approached the Customs, Excise and Service Tax Appellate Tribunal (tribunal, for short). The tribunal has disposed of these appeals by three separate orders but all dated 26th March, 2012. The reasoning given in the impugned orders is also identical, though the quantum of personal and redemption fine imposed are different. In paragraph 6 of the orders of the tribunal, it is recorded that the appellants did not dispute at the time of the search that statutory records like production register, raw material register, invoice etc. were not there in the factory. The goods found in the factory, which represented their production was not entered in the RG-1 register. Thus, there was violation of Rule 10 of the Central Excise Rules, 2002, which attracts confiscation of unaccounted for goods and penalty on the manufacture under Rule 25 thereof.
2. Learned counsel for the appellants has drawn our attention to the redemption fine, which has been imposed on three appellants, which is as under:-
3. For the sake of clarity, we note that personal fines were also imposed on the directors of the two companies but they have not preferred any appeal and the order of the tribunal against them have become final. The tribunal had substantially reduced personal penalties payable/fines to be paid by the directors and this is probably the reason why appeals have not been preferred. Bombay Metal Industries is sole proprietorship of Harish Chand Goyal.
4. The contention of the appellants herein is that while examining the question/issue of redemption fine, only unaccounted stock can be taken into consideration. Our attention is drawn to the grounds of appeal preferred before the tribunal wherein it was submitted and alleged that RG-IV Register was found at the administrative office on the date of the search, i.e., 7th January, 2009. The said RG register contained details of all accounted for and duly recorded purchases of raw material. The redemption fine could not have been imposed on duly accounted for purchases. It is submitted that this specific plea was earlier raised, in reply to the show cause notice and the amount of accounted for purchases were stated and computed. It was stated that substantial raw material was duly accounted for in RG-IV Register. Our attention is drawn to the reply to show cause notices submitted by Micro Super Cables Private Limited, Unit-I in which it was stated that excess stock or shortage of stock was worth about Rs. 3,57,500/- and the duty element for unaccounted for excess or shortage was Rs. 38,056/-. Similarly, in the case of Micro Super Cables Private Limited, Unit-II, the unaccounted stock was valued at Rs. 2,70,000/-. The excise duty payable on the said excess/shortage was Rs. 25,250/-. In the case of Bombay Metal Industries, it was stated that excess stock of 113 Kg. involving duty of Rs. 2,912/- was found and the balance stock was completely accounted and recorded. It is accordingly submitted that without adjudication and decision on the said aspect, the quantum of redemption fine should not have been ascertained and imposed. The adjudicating authority as well as the appellate authority, including the tribunal, have not gone and examined the said aspect while fixing the quantum of redemption fine.
5. We have examined the grounds of appeal raised by the appellants wherein the said contention has been explicitly raised. However, we find neither the adjudicating authority, first appellate authority and the tribunal have dealt with and examined the said grounds or answered the same. RG-IV registers, entries therein and whether they were found at the time of the search is neither adverted to nor dealt with.
6. In view of the aforesaid position, we answer the question of law mentioned above in favour of the appellants and against the Revenue with an order of remand for fresh decision by the tribunal. The tribunal will examine the entire controversy once again, without being influenced by the earlier order. We, therefore, clarify that the tribunal will be at liberty to impose redemption fine in accordance with law without taking into notice the earlier fine. If required and necessary, the respondent will be entitled to meet and answer the contentions after verification as permitted and allowed under the rules. In order to expedite the hearing and curtail delay, it is directed that the appellants will appear before the tribunal on 7th October, 2013, when a date of hearing will be fixed.
The appeals are disposed of.
