2004 (7) TMI 536 - AT - Central Excise

Confiscation - Non-accountal of goods - Show Cause Notice - Authority to issue - Cenvat/Modvat - Redemption fine and penalty

Summary

Issues:
Confiscation of goods, imposition of penalty, validity of show cause notice, applicability of Rule 173Q, Modvat credit claim, reduction in redemption fine.

Confiscation of Goods and Imposition of Penalty:
The appeals were against an order confiscating goods with excise duty of Rs. 61,034, allowing redemption on payment of Rs. 95,365.50 and imposing a penalty of Rs. 10,000 each on both appellants. The goods were found to be cleared without payment of duty by the manufacturer using a fake invoice. The appellants' argument that they later paid the duty and the manufacturer rectified the record was rejected. The Tribunal upheld the confiscation as the goods were cleared without duty payment, rejecting the argument of non-accountal of goods and invoking Rule 173Q without proving mens rea.

Validity of Show Cause Notice:
The argument that the show cause notice was not issued by a competent authority was dismissed as it was not raised in the reply to the notice. The Tribunal held that the Asstt. Commissioner issuing the notice was competent under the Central Excise Act. The principle of estoppel against law was deemed inapplicable, and no prejudice was found as the appellants were heard by the adjudicating authority and the first appellate authority.

Applicability of Modvat Credit Claim:
The Tribunal stated that the claim for Modvat credit was not a point in issue in the proceedings. The appellants were advised to lodge their claim before the competent authority as per law. The Tribunal clarified that it cannot direct the authority to allow credit solely based on duty payment, as the entitlement to credit must be examined by the competent authority based on legal considerations.

Reduction in Redemption Fine and Maintenance of Penalty:
The Tribunal considered reducing the redemption fine due to duty payment but maintained the penalty as reasonable. The redemption fine was reduced to Rs. 25,000, acknowledging the duty payment and the circumstances. Except for this modification, the impugned order was upheld, and the appeals were disposed of accordingly.