2003 (4) TMI 487 - AT - Customs

Confiscation and penalty - Clandestine removal of goods - Demand - Cenvat/Modvat - Penalty and interest

Summary

Issues:
- Confiscation of goods and truck due to non-payment of duty
- Shortage and excess of goods in factory premises
- Disallowance of Modvat credit on inputs
- Imposition of penalties on appellants
- Confiscation of truck and penalties on other parties involved

Confiscation of Goods and Truck:
The case involved the interception of a truck carrying CTD Bars without payment of duty, leading to the seizure of goods and the truck. The Commissioner's order confiscated the CTD bars from the truck and excess goods found in the factory premises, with an option for redemption on payment of fines. The appellant argued that the CTD bars were accounted for in the register and there was no mala fide intention. The tribunal upheld the confiscation of goods due to non-payment of duty and imposed penalties accordingly.

Shortage and Excess Goods:
The appellant contested the shortage and excess of goods found in the factory, claiming that the calculation was not based on actual weighment but on estimation. They argued that certain products were intermediate and should offset shortages. The tribunal found that the shortage of inputs led to a demand for duty on the finished products that could have been manufactured, upholding the duty demand but allowing Modvat credit on the inputs. Penalties under specific sections were set aside due to their non-applicability at the material time.

Modvat Credit and Penalties:
The tribunal agreed with the appellant that Modvat credit could not be disallowed when duty was demanded on finished goods made from short inputs. Penalties under Sections 11AC and 11AB were set aside as these sections were not in force at the relevant time. However, penalties were imposed on specific individuals involved in the removal of goods without duty payment.

Confiscation of Truck and Other Parties:
The tribunal found that penalties under Rule 209A were not applicable to other parties involved, as there was no evidence of their knowledge or involvement in the evasion of duty. The confiscation of the truck was set aside, along with penalties on other appellants, based on the lack of evidence showing their awareness of the duty evasion.

In conclusion, the tribunal confirmed the duty demand against the main appellant, upheld the confiscation of certain goods, reduced redemption fines, set aside Modvat credit disallowance, and adjusted penalties accordingly for different parties involved in the case.