2007 (3) TMI 472 - AT - Central Excise

Summary

Issues:
Confiscation of finished goods and raw materials, imposition of penalty, reduction of redemption fine and penalty, duty paid nature of raw materials, intention of clandestine removal, personal penalty on partner.

Confiscation of Finished Goods:
The case involved appeals against an Order-in-Appeal that upheld the confiscation of finished goods and raw materials, along with the imposition of penalties. The central issue was the mismatch of goods found during a surprise visit, leading to suspicions of clandestine removal. The Commissioner (Appeals) reduced the redemption fine and penalty but upheld the confiscation of finished goods. The Tribunal cited Rule 173Q(1)(b) of the Central Excise Rules to support the confiscation, emphasizing the non-accountal of finished goods as grounds for penalty. The Tribunal upheld the Commissioner's decision on confiscation and reduced the penalty to Rs. 5000.

Confiscation of Raw Materials:
Regarding the raw materials, the Tribunal considered the nature of the seized "Scrap of Iron Plates obtained from ship breaking." The appellants provided evidence of duty paid nature through invoices from Virat Ship Breaking Corporation. The Tribunal emphasized that duty paid raw materials are not liable for confiscation under Rule 173Q. As the Revenue failed to provide contrary evidence or show Modvat credit availed by the appellants, the confiscation of raw materials was deemed unsustainable. The Tribunal set aside the order upholding the confiscation of raw materials and consequently nullified the penalty associated with it.

Personal Penalty on Partner:
The Tribunal addressed the personal penalty imposed on the partner of the firm, noting the partner's lack of involvement in day-to-day accounting and the absence of intent for clandestine removal. As there was no evidence supporting the partner's liability, the penalty on the partner was deemed unwarranted and set aside.

In conclusion, the Tribunal disposed of both appeals by upholding the confiscation of finished goods while reducing the penalty, setting aside the confiscation and penalty for raw materials, and nullifying the personal penalty imposed on the partner due to the lack of involvement and absence of intent for clandestine activities.