2013 (4) TMI 218

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....d in excess and also demanding duty on the goods found short. 3. On adjudication, excess goods found were confiscated and ordered to released on payment of a fine of Rs. 3,34,980/- and applicable duties. Further a penalty of Rs. 2,18,674/- was imposed under Rule 25 of Central Excise Rules, 2002 considering such confiscation. Further duty of Rs. 29,425/- on MS Rounds found short was confirmed along with penalty of Rs. 29,425/- imposed under Section 11AC. 4. Aggrieved by the adjudication order the respondent filed an appeal with Commissioner (Appeals) who set aside the confiscation of goods found in excess and penalty imposed on this count. He set aside the demand for duty amounting to Rs. 29,425/- on the ground that the Department has not proved that the goods which were found short were actually removed without payment of duty. But he upheld penalty of Rs. 29,425/- on the ground that the respondent did not account for the goods found short. Aggrieved by the order of the Commissioner (Appeals), Revenue has filed this appeal. 5. Commissioner (Appeals) has held that confiscation under Rule 25 of the Central Excise Rules, 2002 is subject to the provisions of Section 1....

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.... Excise Rules, 2002 reads as under : "RULE 10. Daily stock account. - (1) Every assessee shall maintain proper records, on a daily basis, in a legible manner indicating the particulars regarding description of the goods produced or manufactured, opening balance, quantity produced or manufactured, inventory of goods, quantity removed, assessable value, the amount of duty payable and particulars regarding amount of duty actually paid. (2) The first page and the last page of each such account book shall be duly authenticated by the producer or the manufacturer or his authorised agent. (3) All such records shall be preserved for a period of five years immediately after the financial year to which such records pertain." 10. Rule 2(c) of the Central Excise Rules, 2002 defines assessee as  under : "assessee" means any person who is liable for payment of duty assessed or a producer or manufacturer of excisable goods or a registered person of a private warehouse in which excisable goods are stored and includes an authorized agent of such person". 11. So it is clear that every person liable to pay duty has to maintain a record showing daily production of e....

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....ses (a), (b), and (c) of Rule 25 goods becomes liable to confiscation irrespective of the intentions. For example if somebody manufactures excisable goods without applying for registration the goods becomes liable to confiscation and the intention of the person concerned is irrelevant. However in the case of situation covered under clause (d) there is need to prove intention because it is expressly stated so in the clause. 13. However it is now become a common practice for adjudicating officers to interpret that Section 11AC and Rule 25 are to be read together and quite often penalty is imposed under Rule 25 read with Section 11AC. But this is not the case in the adjudication order in this case. Here penalty is imposed under Rule 25 in respect of goods found in excess. 14. Another argument raised is that the expression "does not account for any excisable goods" has a different meaning from "does not record any excisable goods in registers prescribed". This is an interpretation quite often canvassed based on the decision of the Tribunal in the case of Pepsi Foods v. CCE - 2002 (139) E.L.T. 658 (Tri.-Del.) (Para 10 of the decision may be seen). The expression "does not ac....

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....t no manufacturer need maintain such records or a Small Scale Unit per se does not have to maintain records required under Rule 10. In this case the respondent was about to cross the exemption limit and liable to pay duty. So this decision is not applicable to this case. 17. In the case of Vacmet Packaging Pvt. Ltd. The assessee had paid duty on goods found short on the day of the visit and the question was whether penalty was imposable under Section 11AC of the Act. In the present case the issue is whether penalty is imposable under Rule 25 of the said Rules for not accounting finished goods in the records. 18. The case of Bhillai Steel Conductors and Kelvert Foods India Pvt. Ltd. were decided prior to the decisions of the Apex Court in the case of Dharamendra Textiles - 2008 (231) E.L.T. 3 (S.C.). The Apex Court has recognized the principle of statutory penalty in the case of UOI v. Dharmendra Textiles wherein the Court held that where the statute prescribes a penalty without reference to intention to evade duty such penalty is to be imposed without regard to mens rea. So the argument that for imposing any penalty, mens rea has to be first proved is not correct. In th....