2007 (1) TMI 364 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty and redemption fine against the appellant for unaccounted goods found in the factory.
2. Dispute regarding maintenance of proper records by the appellant.
3. Applicability of small-scale exemption notification to the appellant's case.

Imposition of Penalty and Redemption Fine:
The appellant filed an appeal against the penalty and redemption fine imposed due to unaccounted goods found in the factory. The Revenue alleged that the appellants did not maintain proper records, leading to the penalty imposition. However, no demand was raised in the show cause notice, and only the penalty was imposed. The appellant argued that despite the unaccounted goods, they were within the clearance limit specified under the small-scale exemption notification. They contended that since no demand was made, the goods should not be liable for confiscation, and they should not be penalized. The Tribunal referred to a previous case where it was held that for small-scale exemption, production and clearance records are not mandatory. As the Revenue did not claim that the appellant exceeded the exemption limit and no demand was made, the penalty and redemption fine were set aside, and the appeal was allowed.

Maintenance of Proper Records:
The Revenue contended that the appellants were obligated to maintain proper records, and therefore, should be penalized for the unaccounted goods found. The appellant argued that they were maintaining private records, and the discrepancy was due to the comparison with existing goods. They emphasized that no demand was made, and hence, they should not be penalized. The Tribunal considered the absence of a demand, the small-scale exemption status of the appellants, and the lack of evidence that the clearance limit was breached. Relying on a previous decision, the Tribunal concluded that the penalty was not justified in this case, as the appellant did not exceed the exemption limit and no demand was raised, leading to the setting aside of the penalty and redemption fine.

Applicability of Small-Scale Exemption Notification:
The appellants were benefiting from the small-scale exemption notification. The Revenue did not argue that the appellant exceeded the clearance limit under this notification. The Tribunal highlighted that for small-scale exemption, maintenance of production and clearance records is not mandatory, as established in a previous case. Since no demand was made, and the Revenue did not claim a breach of the exemption limit, the Tribunal set aside the penalty and redemption fine, allowing the appeal in favor of the appellant.

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