2001 (6) TMI 597 - AT - Central Excise

Summary

Issues:
1. Liability of a company to pay duty and penalty.
2. Determination of shortage of imported fabrics.
3. Imposition of penalty on cleared goods.
4. Liability of a director for penalty.

Analysis:

1. The appeal concerned the liability of a company to pay duty and penalty as confirmed by the Collector of Customs. The company had been approved as a 100% export-oriented unit and had imported goods for manufacturing garments. The department alleged a shortage of imported fabrics, leading to a demand for duty and penalty. The Commissioner passed the impugned order based on these allegations.

2. The main objection raised by the appellant's counsel was that the shortage determination by the department was arbitrary and not based on actual facts. The department calculated the shortage based on wastage of fabrics during manufacturing, but the appellant argued that fabrics were traded based on length, not weight. The appellant maintained records in linear meters, while the department considered weight for its calculations. Despite the discrepancy, the appellant failed to provide satisfactory explanations or evidence to counter the department's claims.

3. The issue of imposing a penalty on cleared goods was raised by the appellant's counsel. The show cause notice alleged removal of fabrics from the bonded warehouse, but no concrete evidence was presented to support this claim. The customs officers' laxity in enforcing regulations and lack of proper record-keeping at the premises made it challenging to establish illicit removal conclusively. However, the liability for confiscation of goods under the Customs Act was upheld, leading to a reduction in the penalty imposed on the appellant.

4. The liability of a director for the penalty was also addressed in the judgment. While the appellant argued against imposing a penalty on the director, it was established that the director was responsible for overseeing the company's operations and policies. Despite the lack of detailed allegations against the director, his role in the company's functioning justified holding him liable for the penalty.

In conclusion, the appeal was allowed in part, with the tribunal addressing various issues related to duty liability, shortage determination, penalty imposition on cleared goods, and director's liability for penalties. The judgment highlighted the importance of maintaining accurate records, complying with regulations, and providing evidence to support claims in customs-related cases.