2003 (3) TMI 435 - AT - Central Excise

Summary

Issues:
1. Confiscation of aromatic chemicals due to non-payment of duty.
2. Allegations of contraventions including shortage of finished goods and excess of other goods.
3. Interpretation of circular No. 207/37-M/77-CX by Commissioner (Appeals).
4. Verification of duty payment details and temporary custody of seized goods.
5. Application of circular of the Board to the case.
6. Justification for confiscation of goods.

Analysis:
1. The appeal involved the confiscation of 363.5 kgs. of aromatic chemicals due to alleged non-payment of duty. The Assistant Commissioner initially ordered confiscation, duty payment, and penalty. The Commissioner (Appeals) set aside the confiscation based on a technical breach, citing a circular of the Board. However, the appellate tribunal found that the goods were physically removed by the assessee, seized by officers, and temporarily kept with the assessee for safe custody, leading to the decision to set aside the demand for duty being unsustainable.

2. The allegations included not only non-payment of duty but also shortages of finished goods and excess of other goods. The officers concluded that there was an intent to remove the goods without paying duty. The tribunal noted the lack of satisfactory explanation for the failure to debit duty and the acceptance of the lapse by the assessee's partners, justifying the confiscation of the goods.

3. The Commissioner (Appeals) interpreted circular No. 207/37-M/77-CX to support setting aside the demand for duty based on a technical breach. However, the tribunal disagreed, stating that the circular's illustration did not apply to the case at hand, especially given the additional issues of shortages and excess quantities.

4. The order clarified that the goods were seized enroute, taken to the assessee's factory for duty verification, and then temporarily kept with the assessee. The tribunal emphasized that the goods were not returned to the factory as claimed by the Commissioner (Appeals), highlighting the incorrectness of this assertion.

5. The tribunal rejected the applicability of the Board's circular to the case due to the presence of shortages and excess quantities, indicating an intent to evade duty payment. The failure to debit duty on the goods in question, coupled with the acceptance of the lapse by the assessee's partners, further supported the justification for the confiscation of the goods.

6. Ultimately, the tribunal allowed the appeal, setting aside the Commissioner (Appeals)'s decision on the demand for duty, while reducing the redemption fine from Rs. 50,000 to Rs. 20,000. The decision was based on the findings regarding the physical removal of goods, intent to evade duty payment, and lack of satisfactory explanations for the lapses identified during the proceedings.