2005 (9) TMI 403 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty on Executive Director for alleged involvement in clandestine removal of finished goods.
2. Confiscation of semi-finished goods stored along with finished goods.

Issue 1: Imposition of Penalty on Executive Director
The appeal was filed against the imposition of a penalty on the Executive Director for alleged involvement in clandestine removal of finished goods. The appellant argued that as an Executive Director, he was not directly involved in excise work and there was no evidence to prove his intent to evade duty. The Revenue contended that the Executive Director was responsible for paperwork and communication with the Managing Director, thus making him liable for the penalty. The Adjudicating Authority initially imposed a penalty of Rupees five lakh, which was later reduced to Rupees 35,000 by the Commissioner (Appeals). The Commissioner held that the substitution of semi-finished goods could not have occurred without the Executive Director's consent and knowledge. However, the absence of concrete evidence linking the appellant to the substitution led to the conclusion that the penalty imposition was unsustainable. Consequently, the penalty was set aside, and the appeal by the Executive Director was allowed, while the Revenue's appeals were dismissed.

Issue 2: Confiscation of Semi-Finished Goods
The second appeal by the Revenue challenged the order setting aside the confiscation of semi-finished goods stored alongside finished goods. The Revenue argued that the arrangement of storing unfinished goods with finished goods was a tactic to evade duty payment. However, it was established that the unfinished goods in question were incomplete and could not be used as intended, rendering them as semi-finished goods. The mere presence of semi-finished goods alongside finished goods was deemed insufficient to justify confiscation. The judgment found no fault in setting aside the confiscation, as the goods in question were not usable as intended gaskets. Consequently, the Revenue's appeal regarding the confiscation was dismissed.

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