1. The Additional Collector of Central Excise, Cochin, has imposed penalties of Rs. 500/-, Rs. 500/-, Rs. 5,000/- and Rs. 500/- under Rules 9(2), 52(A), 173(Q) and 226 of the Central Excise Rules, 1944 respectively on the appellants in respect of removal of 20 quintals of sugar without debit for duty in the Personal Ledger Account (PLA) and without a valid Gate Pass. There is also some reference to central excise registers being tampered with and alterations made unauthorisedly.
2. At the time of hearing, the representative of the appellant sought to urge that action under Rule 9(2) is bad in law as provisions relating to sugar, which is a commodity under the Self Removal Procedure is all contained in Chapter VII-A itself and in support, relied on Rule 173A. As alternate submission, he indicated that there was no intention to evade payment of duty. What happened was a bona fide error as the Superintendent (Production) who normally attends to excise formalities was on leave on that day and the Manager (Administration) authorised the removal of 186 quintals of sugar as against a permissible quantity of 166 quintals on a delivery challan.
This led to removal of excess quantity of 20 quintals of sugar without proper entries in the P.L. Account or a Gate Pass. The factory had been taken over by the Government of Kerala about 20 years ago and has had no record of previous offence of this type. The duty involved is only Rs. 1,300/- hence he pleaded that the penalties are on the high side.
3. Senior Departmental Representative referred to various infractions committed under Rules 9(1), 52A, 173F and 226 of the Central Excise Rules and hence justified the imposition of the penalties.
4. I have considered the points put forward by both the sides. Chapter VII-A no doubt deals with the procedure in respect of "notified commodities" what is commonly called under the Self Removal Procedure but, I am afraid that the reading of 173A as sought to be done by the representative of the appellant does not present a true picture.
Chapter VII-A recognises the existence of all the other provisions of the Act and the Rules. In fact, it makes specific amendments to certain, rules, such as those relating to warehousing or exports and in that sense, recognises the applicability of these rules generally and hence makes modifications. Basically, Rule 173A states : "where there is a conflict between the provisions of this Chapter and the provisions contained in any other Chapter, in relation to such excisable goods, the provisions of this Chapter shall prevail." This itself is an indication that the provisions of other Chapters could be applicable when there is a conflict between the different provisions, the provisions of Chapter VII-A shall prevail. I, therefore, reject the contention of the representative of the appellant.
5. What has happened in this case may be broadly summarised as follows : a) removal of sugar without payment of duty, an act contrary to the provisions of Rule 9(1); b) removal without the quantity being shown correctly in a Gate Pass and thus, in fact, removed without a Gate Pass dealt with in Rule 52A; c) incorrect maintenance of accounts or attempted erasures thereto, which brings in Rule 226.
For infraction of Rule 9(1), penalties have been provided in Rule 9(2); infraction of 52A is provided for in 52A(1) itself. So is the case with Rule 226.
6. The question for consideration is to what extent the Additional Collector was justified in imposing penalties under all these provisions when he has taken recourse to a penalty under Rule 173Q also. The relevant portion of Rule 173Q is as follows : a) removes any excisable goods in contravention of any of the provisions of these rules; or b) does not account for any excisable goods, manufactured, produced or stored by him; or c) engages in the manufacture, production or storage of any excisable goods without having applied for the licence required under Section 6 of the Act; or d) contravenes any of the provisions of these rules with intent to evade payment of duty, then, all such goods shall be liable to confiscation and the manufacturer, producer or licensee of the warehouse, as the case may be, shall be liable to penalty not exceeding three times the value of the excisable goods" (involved) Both Rules 9(2) and 173Q (1) deal with the same situation-removal of excisable goods in contravention of the provisions of Rules. They therefore, over-lap. Hence, there cannot be any penal action in terms of Rule 9(2) in addition to one under Rule 173Q. If one were to go by Rule 173Q, where there is a conflict between the provisions of Rule 173Q and Rule 9(2), the provisions of theformer shall prevail in terms of Rule 173A. There is a conflict in the sense that Rule 173Q provides for a higher quantum of penalty than the one under Rule 9(2).
7. Rule 52(A) again deals with removal of goods without a Gate Pass which was not done in the present case. Hereto, what I have observed in regard to 9(2) would be applicable.
8. So far as Rule 226 is concerned, there is no direct conflict between 173Q and the penal provisions of Rule 226.
9. In the above view of the matter, I consider that the imposition of penalties both under Rules 9(2) and 52(A) on the one hand and under Rule 173Q on the other is not in order. The orders imposing the first two penalties are therefore set aside.
10. So far as the penalty under Rule 226 is concerned, as I have already observed earlier, the provisions are independent of those of Rule 173Q that penalty is sustainable in law. The amount involved is small. I see no reason to interfere with that penalty.
11. This brings me to the quantum of penalty under Rule 173Q itself.
The only plea made on behalf of the appellant is that the duty involved is Rs. 1,300/- and the party has had a clean record for the last 20 years. As against this, one has to weigh the need to view infractions of provisions under the Self Removal Procedure strictly. A trust is reposed on the assessee and when that trust is betrayed, it has to be viewed with severity. In this case, it is all the more so when we are dealing with a Government organisation which ought to know better than to take things in a cavalier manner when the Assistant Manager (Production) authorised clearances (in the absence of his subordinate who used to attend to that work) without caring whether the regulations have been properly followed or not. Balancing these two needs, I order that the penalty under 173Q be reduced to Rs. 4,000/- (Rupees four thousand only).