2004 (11) TMI 389 - AT - Central Excise

Summary

Issues:
Challenge to duty demand, penalties, and confiscation of goods affirmed by Commissioner (Appeals) - Shortage of finished goods contested - Duty demand on goods removed with kacha challans - Duty demand on short found raw material contested - Benefit of cum-duty price and penalty amount challenged.

Analysis:
The appeal challenged the impugned order-in-appeal that affirmed duty demand, penalties, and confiscation of goods against the appellants. The appellants were involved in manufacturing processed fabrics using grey and cotton fabrics as inputs. An interception on 13-9-1999 revealed discrepancies in finished goods not entered in statutory records. The duty amount for the intercepted goods had been paid by the appellants. The seizure and confiscation of unrecorded goods were not contested, including the redemption fine imposed. However, a shortage of finished goods leading to duty demand was contested as the goods were part of the intercepted goods for which duty had already been paid. The Tribunal accepted this contention, setting aside the duty demand for the shortage of goods.

Another duty demand on goods removed with kacha challans listed in the factory's notebook was not contested by the appellants, leading to the affirmation of the duty demand in this regard. The duty demand on short found raw material was contested on the grounds that no credit was availed on these materials, which were purchased from the market. The raw material was used in manufacturing finished goods removed under kacha challans, for which duty had been paid. The Tribunal accepted this contention, setting aside the duty demand on the raw material.

The appellants also challenged the penalty amount imposed, arguing that no benefit of cum-duty price had been given to them, and the penalty was excessive considering the reduced duty liability after allowing the benefit of cum-duty price. The Tribunal agreed with this contention, re-quantifying the duty amount by allowing the benefit of cum-duty price, substantially reducing the duty liability. Consequently, the penalty imposed on the appellants was reduced to Rs. 10,000. The impugned order was modified/set aside accordingly, disposing of the appeal in the above terms.