Versus Mian Abdul Ghaffar , Khalid Mahmood
ZAFAR UL MAJEED, MEMBER (TECHNICAL).--- This appeal emanates from Order-in-Original No. CE-81 of 2001 dated 2-6-2001 passed by the Collector of Customs, Sales Tax and Central Excise (Adjudication), Lahore.
2. Briefly stated, the facts of the case are that on 6-12-1999, the staff of Collectorate of Central Excise Lahore visited the appellant's factory premises and on scrutiny of the prescribed central excise record detected shortage of 5266 Kgs of Box Board in the RG-1 godown which was admitted by the Mills excise attorney in his statement. During the course of physical verification of stocks, the detecting staff also observed that a quantity of 378025 Kgs Box Board was lying in the Mills premises beyond the period of six months prescribed under rule 47 of the Central Excise Rules, 1944 (hereinafter referred to as "the Rules") which was pledged by the management with Al-Baraka Islamic Bank, Lahore. The appellant was accordingly charged with the contravention of Rules 7, 9, 47, 52, 52-A and 226 of the Rules and sections 3, 6, 22, 23 and 26 of the Sales Tax Act, 1990. The case was adjudicated by the Collector (Adjudication) Lahore vide impugned order whereby following amounts of central excise duty (CED), sales tax and penalties have been adjudged against the appellant:
(i) Demands of CED amounting to Rs.6,977 for shortage of goods in RG-1 godown and Rs.5,07,860 on account of goods lying uncleared in the Mills premises beyond prescribed period of six months along with additional duty under section 3-B of the Central Excise Act, 1944 (hereinafter referred to as "the Act") besides penalty of Rs.2,00,000 under rule 210 of the Rules ?
(ii) Demand of sales tax amounting to Rs.16,21.740 along with the additional tax besides penalty of Rs.48,652 under section 33 of the Sales Tax Act, 1990.
3. This appeal is being treated as the one under section 35-B of the Act as opted by the appellant's counsel vide this Tribunal's order dated 28-8-2002 and challenges only part of the impugned order relating to demand of CED and penalty imposed- under the Rules and the Act. The appellant has raised following contentions in support of the appeal: --
(i) That the shortage of stock in the RG-1 godown is not substantiated by any cogent evidence or actual weighment. In the statement of excise attorney relied upon by the detecting agency, it is clearly stated that the weight of goods was mentioned in the record approximately.
(ii) That the change regarding uncleared stock of 378025 Kgs, beyond prescribed period of six months is also not supported by any cogent evidence or prescribed central excise record. The certificate of Al-Baraka Islamic Bank which has been relied upon by the detecting agency is not conclusive evidence to prove the allegation. According to the appellant, there was no stock lying uncleared beyond the prescribed period which could be proved from the record but detecting agency made no effort to verify it. In fact the pledged quantity of goods was continuously replaced by the fresh stock of production as could be seen from the figures of production and clearance reported in the monthly RT-1 returns submitted by the appellant.
4. During the course of hearing on 15-1-2002, learned counsel for the appellant stated that the appellant did not contest the point regarding shortage of 5266 Kgs of goods. The second charge was however, contested and in support of the appellant's contention in this regard, learned counsel placed on record photocopies of several RT-1 returns and a statement of monthly production, opening and closing stock pertaining to the relevant period. Copies of these documents were handed over to the D.R. for verification. On 29-5-2002 learned D.R. submitted report signed by Mr. Mas000d Ahmad, Inspector whereby the contents of RT-1 provided by the appellant were verified to be correct when checked with the RG-1 register; however, the statement furnished by Al-Baraka Bank did not tally with the C.E. record.
5. We have carefully examined the case record and given due consideration to the submissions made by the parties. The charge relating to the shortage of stock in the RG-1 godown stands established as admitted by the appellant's excise attorney in his written statement recorded by the detecting staff at the time of their visit. Demand of CED amounting to Rs.6,977 along with additional duty under section 3-B of the Act is, therefore, upheld.
6. Regarding storage of 378025 Kgs of Box Board beyond the prescribed period of six months, we find considerable force in the appellant's contention that no stock stayed uncleared beyond prescribed period because fresh stocks of production continued to replace the old stock under pledge with the Bank. The monthly RT-1 returns and statement of production and closing stock produced by the appellant stand verified by the department which prove the appellant's contention. We also agree with the appellant's contention that the certificate of Al-Baraka Bank is of no relevance in the presence of prescribed C.E. record according to which the closing balance of stock in certain months was even less than the pledged quantity. Demand of CED amounting to Rs.5,07,860 and additional duty on this account is therefore dropped. Penalty of Rs.2,00,000 imposed under rule 210 of the Rules is also remitted.
7. The appeal is partly accepted as above and the impugned order is modified accordingly.
H.B.T./133/Tax (Trib.) Appeal partly accepted.