2006 (10) TMI 328 - AT - Central Excise

Summary

Issues: Confiscation of imported processed fabrics, duty demand, penalty imposition, legality of procurement without duty paying documents, defense of goods received from job worker, non-accountal of excess stock, sustainability of duty demand, penalty on the importer and director.

Confiscation and Penalty Imposition: The case involved the confiscation of 47956 yards of imported processed fabrics found in excess in a factory, with a fine and penalty imposed on the importer and its director. The Tribunal noted that the unit procured goods illicitly without proper duty paying documents, and the defense of receiving goods back from a job worker was rejected as the job worker denied any involvement. The Commissioner's rejection of the plea of error in calculation was upheld, and no grounds were found to challenge the confiscation, penalty, and duty demand.

Legality of Procurement and Duty Demand: The 100% Export-Oriented Unit (EOU) was entitled to duty-free imported fabrics for manufacturing garments for export. However, the unit in question obtained goods without valid documents for licit import, as the seized quantity lacked necessary documentation. The Tribunal referenced a previous order involving the same appellants, upholding duty demand on fabrics diverted to the local market without being used for export garments. The Tribunal found the duty demand, confiscation, and penalty on the EOU sustainable, as no defense was raised on merits against the demand.

Penalty on Director: The penalty on the director was upheld based on his admission of not being able to produce any documents proving legal import or purchase of the seized goods. The lack of relevance between the seized goods and those claimed to be received back from job workers further supported the penalty imposition. The Tribunal affirmed the impugned order, sustaining the penalty on the director and rejecting the appeals.

In conclusion, the Appellate Tribunal upheld the order of confiscation, duty demand, and penalty imposition on the importer and director, emphasizing the illegality of procurement without proper documentation and the lack of valid defenses presented. The judgment highlighted the importance of complying with duty paying regulations and the consequences of diverting duty-free goods meant for export into the local market.