2005 (5) TMI 571 - AT - Central Excise

Summary

Issues:
1. Duty deposit by the appellant.
2. Clandestine removal of fabrics.
3. Confirmation of demand of duty and imposition of penalties.
4. Appeal against the order of the Additional Commissioner.
5. Justification for confiscation of excess fabrics.
6. Reduction of redemption fine and penalties.

Analysis:

Issue 1: Duty deposit by the appellant
The appellant had deposited the entire amount of duty of Rs. 4,67,341, leading to the dispensation of the condition of pre-deposit of personal penalty of Rs. 50,000 imposed on each appellant.

Issue 2: Clandestine removal of fabrics
Central Excise Officers found 139 kachcha delivery challans during a visit to the appellant's factory, indicating the clearance of man-made fabrics without payment of duty. Additionally, excess stock of processed fabrics was discovered, which the appellant's authorized signatory admitted was intended for illicit clearance.

Issue 3: Confirmation of demand of duty and imposition of penalties
Proceedings were initiated against the appellants for the confirmation of duty demand and imposition of penalties. The Additional Commissioner confirmed the demand of duty and imposed penalties, including a personal penalty of Rs. 50,000 under Rule 25 of Central Excise Rules, 2002.

Issue 4: Appeal against the order of the Additional Commissioner
On appeal, the appellate authority confirmed the order, but set aside the penalty under Section 11AC due to duty deposit before the show cause notice. The order was challenged before the Tribunal.

Issue 5: Justification for confiscation of excess fabrics
The appellants did not contest the clandestine removal but argued against the confiscation of excess fabrics, claiming they were intended for the day's production and were to be entered in the register later. The Tribunal found no merit in this argument due to lack of evidence supporting the claim.

Issue 6: Reduction of redemption fine and penalties
The Tribunal upheld the confiscation of fabrics but reduced the redemption fine from Rs. 1 lakh to Rs. 75,000, considering the value of the fabrics. The personal penalty on the company was maintained, while the penalty on the authorized signatory was reduced from Rs. 50,000 to Rs. 25,000. The appeals were rejected except for the modifications in the quantum of redemption fine and penalties.