2006 (11) TMI 37 - AT - Central Excise

Confiscation - A number of cases were alleged against the appellant such as excess stock of finished goods,Modvatted SS sheet cleared at a lower value and shortage of inputs - Adjudicating authority after looking over all circumstances reduces the penalty

Summary

Issues:
1. Confiscation of seized goods and imposition of penalty upheld by lower authorities.
2. Excess stock of finished goods seized and duty demand on SS sheets cleared at lower value.
3. Duty demand on inputs cleared without payment, duty demand on Modvat credit, and non-available capital goods.
4. Demand of duty on clearances of outer tubs at lower value.
5. Shortage of inputs on which Modvat credit was availed.

Analysis:

1. The case involved an appeal against an order confirming demand, confiscating seized goods, and imposing a penalty. The appellant argued that the seized goods were day's production, duty was correctly paid on modvatted inputs, and there was no clandestine removal. Both the adjudicating authority and the Commissioner (Appeals) upheld the decision. The tribunal referred to a previous judgment stating that mens rea is not essential for confiscation under Rule 173Q(1)(a) of the Central Excise Rules, 1944, upholding the confiscation of seized goods.

2. Regarding the excess stock of finished goods and duty demand on SS sheets cleared at a lower value, the appellant claimed the sheets were rejects and duty was correctly paid. The tribunal found discrepancies in the appellant's claims and upheld the demand on SS sheets. However, the duty demand on SS sheets was deemed unsustainable as the sheets were rejected after use, not fetching the same value as new ones.

3. The duty demand on inputs cleared without payment, duty demand on Modvat credit, and non-available capital goods were upheld as the appellant did not challenge these amounts. However, the tribunal set aside the demand on short-found inputs for which Modvat credit was availed, as proper stocktaking was not conducted, and the inputs were utilized in the manufacturing process.

4. The demand of duty on clearances of outer tubs at a lower value was challenged by the appellant, claiming the tubs were rejects from customers. The tribunal found no evidence to support the appellant's claim, upholding the lower authorities' decision on this issue.

5. Lastly, the issue of shortage of inputs on which Modvat credit was availed was discussed. The tribunal found discrepancies in the lower authorities' consideration of the appellant's pleadings, setting aside the demand of duty on short-found inputs as proper documentation indicated the inputs were utilized in the manufacturing process.

In conclusion, the tribunal partially allowed the appeal, reducing the penalty imposed on the appellant to Rs.20,000 based on the findings on various issues discussed in the judgment.