2004 (2) TMI 385 - AT - Central Excise

Seizure - Confiscation of goods - Demand - Clandestine removal - Burden of proof - Penalty - Mandatory penalty - Demand and penalty

Summary

Issues involved:
1. Confiscation of seized goods and redemption fine
2. Duty demand on Ceramic Fibre Rolls
3. Penalty imposition
4. Duty demand on Modvat credit for packing material

Confiscation of seized goods and redemption fine:
The appeal challenged the Order-in-Appeal confirming the confiscation of "Ceramic Fibre Part Blanket" and imposing a redemption fine. The appellants argued that the show cause notice was issued beyond the stipulated six-month period, rendering the goods liable to be returned. The Tribunal agreed that failure to issue the notice within the specified time required returning the seized goods to the appellants. As no valid seizure was made after the expiry of six months, the confiscation was unsustainable. Therefore, the order regarding confiscation and redemption fine was set aside.

Duty demand on Ceramic Fibre Rolls:
The appellants claimed that 277 Rolls were exempt as they were used captively in manufacturing "modules." However, the adjudicating authority found discrepancies in the appellants' defense, noting the lack of documentary evidence supporting their claims. The Tribunal rejected the appellants' contentions, concluding that the Rolls were clandestinely removed due to the absence of valid defense. The penalty imposed for evasion was deemed sustainable.

Penalty imposition:
The appellants argued for a lower penalty amount, contending that it need not equal the duty evaded. While acknowledging this principle, the Tribunal upheld the penalty of Rs. 44,320 due to the established clandestine removal and the appellants' attempts to conceal the evasion by falsely claiming captive consumption.

Duty demand on Modvat credit for packing material:
Regarding the duty demand on Modvat credit for packing material used in packing exempted goods, the appellants' claim for repetitive use of plastic bags was rejected by the lower authorities. The Tribunal upheld the denial of credit as the packing material was used for exempted intermediate goods, not dutiable finished goods. While sustaining the duty demand, the penalty equivalent to the amount imposed on the appellants was set aside due to the absence of duty evasion attempts.

In conclusion, the Tribunal partly allowed the appeal by modifying the penalties and sustaining the impugned order-in-appeal, except for the specified modifications.