2006 (12) TMI 375 - AT - Central Excise

Summary

Issues:
Confiscation of excess goods found in open pit storage and imposition of penalty on the appellant.

Analysis:
The appeal was filed against the order-in-appeal upholding the confiscation of excess goods and penalty imposed on the appellant. The appellant, a manufacturer of sugar and molasses, stored molasses in closed tanks and open pits. During an inspection, it was found that the molasses stored in the open pit exceeded the registered quantity. The authorities seized the excess quantity and issued a show cause notice for confiscation and penalty. The appellant argued that the excess was due to rainwater accumulation and not for evasion of duty. The adjudicating authority and Commissioner (Appeals) upheld the confiscation and penalty.

The appellant contended that the increase in stock was due to rainwater, not for evasion, as no such allegation was made in the show cause notice. They cited a relevant tribunal judgment. The respondent argued that if excess quantity is found, confiscation and penalty are justified. The Tribunal considered the arguments and records. It was confirmed that the excess was due to rainwater accumulation in the open pit, a permitted activity for sugar factories. The Revenue did not dispute this fact or allege intent to evade duty. Since there was no proof of intent to remove excess goods without payment, the penalty was deemed unwarranted. However, a redemption fine was imposed due to inadequate safeguarding against rainwater accumulation. The fine was reduced to Rs. 5,000 considering the nature-caused increase in stock.

The Tribunal concluded that while excess stock was liable for confiscation, there was no intention to clear goods without duty payment. Therefore, the penalty imposed on the appellant was set aside. The impugned order was modified to reduce the redemption fine to Rs. 5,000 and cancel the penalty. The appeal was allowed accordingly.