2001 (11) TMI 356 - AT - Central Excise

Summary

Issues:
Challenge to imposition of penalty under Rule 173Q(b) of the Rules.

Analysis:
The appellants challenged the penalty of Rs. 15,000 imposed under Rule 173Q(b) of the Rules. The appellants did not contest the correctness of the impugned order regarding the seizure of goods and imposition of redemption fine. The counsel contended that penalty under Rule 226, not Rule 173Q, should have been imposed for non-accountal of goods. The counsel relied on a case law to support the argument that mere non-accountal of goods in the register does not attract Rule 173Q without evidence of intention to remove goods clandestinely.

The Departmental Representative (DR) argued in favor of the penalty under Rule 173Q(b) based on the unaccounted goods in the register, indicating potential removal without duty payment. The DR maintained that the penalty was rightly imposed on the appellants. The Tribunal heard both parties and reviewed the records.

The facts revealed that excise officers found excess finished goods during a stock verification at the factory premises. The goods were seized, and the appellants were given the option to redeem them by paying a fine. The penalty under Rule 173Q(b) was imposed for non-accountal of goods. The Commissioner (Appeals) reduced the redemption fine and penalty amounts.

The Tribunal emphasized that for mere non-accountal of goods, Rule 173Q cannot be invoked without evidence of intent to evade duty payment. In this case, there was no proof that the appellants intended to remove goods without duty payment. The goods were found in a bonded store room, and the explanation provided for non-accountal was the director's illness. No other discrepancies were detected, and there was no history of clandestine activities by the appellants. Therefore, the Tribunal concluded that the penalty under Rule 226, with a maximum of Rs. 2,000, was appropriate.

In light of the discussion, the penalty was reduced to Rs. 2,000 under Rule 226. The impugned order was modified accordingly, and the appeal of the appellants was disposed of in this manner.