2001 (11) TMI 768 - AT - Central Excise

Summary

Issues:
1. Confiscation of unaccounted Rice Rubber Rolls.
2. Alleged removal of goods without payment of duty.
3. Lease agreement between two companies.
4. Imposition of redemption fine and penalty.

Confiscation of unaccounted Rice Rubber Rolls:
The case involved two appeals filed by M/s. Aggarwal Rubber Mills and Flexo Industries against orders passed by the Commissioner (Appeals) regarding the confiscation of unaccounted Rice Rubber Rolls. M/s. Aggarwal Rubber Mills leased out their factory to Flexo Industries, and discrepancies were found during a visit by Central Excise Officers. The tribunal upheld the confiscation of 1396 unaccounted Rice Rubber Rolls found in the factory premises as they were not recorded in statutory registers.

Alleged removal of goods without payment of duty:
Regarding the alleged removal of goods without payment of duty, it was argued that 407 pieces of Rice Rubber Rolls were short, with 300 pieces removed from the factory without duty payment. The tribunal ruled that goods cannot be removed from the factory without duty payment, even if stored in a nearby bank godown. The remaining 107 pieces' shortage was attributed to accounting errors over 15 years, leading to the imposition of a penalty on M/s. Aggarwal Rubber Mills.

Lease agreement between two companies:
The issue of the lease agreement between M/s. Aggarwal Rubber Mills and Flexo Industries was raised. The tribunal noted that there was no evidence of the factory being leased to Flexo Industries during the visit by Central Excise Officers. As neither party had applied for registration changes, the tribunal found the argument of goods ownership belonging to Flexo Industries as an afterthought. The tribunal upheld the penalty on M/s. Aggarwal Rubber Mills due to lack of documentation supporting the lease agreement.

Imposition of redemption fine and penalty:
In considering the redemption fine and penalty imposed, the tribunal found them excessive and reduced the redemption fine to Rs. 2 lakhs and the penalty to Rs. 50,000. The decision was based on the circumstances of the case and the interest of justice. Ultimately, the appeals were disposed of with the modified redemption fine and penalty amounts.