2006 (4) TMI 372 - AT - Central Excise

Summary

Issues:
1. Confiscation of unprocessed and processed fabrics for duty evasion.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi addressed the issue of confiscation of 20,000 mts. of unprocessed fabrics and 6,600 mts. of processed fabrics due to alleged duty evasion. The appellant had received the unprocessed fabrics from other units for processing and had processed the fabrics in their own factory. The primary reason for confiscation was the clearance of 15,000 mts. of unprocessed fabrics without debiting Central Excise duty and loading 6,600 mts. of processed fabrics without making duty debit in the accounts, indicating clandestine removal without payment of duty.

The Tribunal considered the arguments presented by both sides. The Departmental Representative emphasized the previous clearance without duty debit and loading without debit as evidence of a systematic modus operandi for duty evasion. The appellant's counsel, however, contended that the failure to make duty debits was a case of delay and highlighted that invoices were prepared before removal, suggesting no intention of clandestine removal. Additionally, the counsel argued that confiscation of unprocessed fabrics, being mere inputs, was not legally permissible under Rule 173Q, citing relevant tribunal decisions.

The Tribunal acknowledged that the manufactured goods were indeed removed without paying Central Excise duty, primarily due to the failure to make required debits in the accounts. While the confiscation and penalty for processed fabrics were upheld, the Tribunal agreed with the appellant's counsel that confiscation of unprocessed inputs was not justified. Consequently, the impugned order was confirmed with modifications, reducing the redemption fine and penalty imposed on the appellant manufacturer. The penalty on the Director, however, was upheld as his involvement in duty evasion was established.

In conclusion, the Tribunal provided relief regarding the confiscation of raw materials, modifying the redemption fine and penalty while confirming the penalty on the Director. The judgment highlighted the importance of proper duty payment procedures and the distinction between processed goods and raw materials in cases of duty evasion.