2002 (10) TMI 510 - AT - Central Excise

Summary

Issues:
- Confirmation of Central Excise duty demand
- Imposition of penalties under various rules
- Confiscation of finished products and raw materials
- Transfer of goods to temporary godown without intimation
- Excess stock of finished goods and raw materials
- Dispute over shortage and excess of goods
- Applicability of Central Excise Rules
- Confiscation and penalty imposition
- Reduction of penalties and redemption fine

Confirmation of Central Excise Duty Demand:
The appeal was filed against an order confirming a Central Excise duty demand of Rs. 84,466, along with penalties imposed under Rule 173Q and Rule 226 of the Central Excise Rules, 1944. The Commissioner also confiscated finished products and raw materials found in excess, offering an option for redemption on payment of a fine. The appellant contested the demand, arguing that the shortage was due to construction work and machinery installation causing space constraints, leading to the transfer of goods to a temporary godown without notifying the authorities.

Excess Stock of Finished Goods and Raw Materials:
The appellant explained that certain material categorized as discarded remained in the factory until disposal and was periodically recorded in RG-I, thus not constituting excess stock. They contended that there was no excess raw material as entries were made in RG 23 - Part I only after determining the actual quantity used in manufacturing. The appellant emphasized the absence of intent to evade duty, citing previous legal precedents to support their case.

Confiscation and Penalty Imposition:
The Department argued that the appellant admitted to shortages/excesses in stock and removal of goods without following Central Excise procedures or paying duty. The Commissioner's findings emphasized the obligation to account for all goods under Central Excise law, rejecting the appellant's explanations. The judgment highlighted that goods removed from the factory premises must be covered by a Central Excise Invoice and duty paid unless exempted. The tribunal agreed with the Commissioner's decision on the demand for duty, confiscation, and penalty imposition.

Reduction of Penalties and Redemption Fine:
While upholding the demand for duty, confiscation, and penalties, the tribunal acknowledged the appellant's argument for reducing the penalties and redemption fine. Consequently, the penalty was reduced to Rs. 25,000, and the redemption fine to Rs. 1 lakh, deeming the initial amounts excessive. The tribunal rejected the appeal, except for the modifications made to the penalties and redemption fine, thereby concluding the case.