2007 (5) TMI 411 - AT - Central Excise

Confiscation and penalty - Clandestine removal - Held that - The shortage of goods found on the date of visit and clear admission about removal of goods found short and payment of duty is a clear indication of the practice of clandestine removal resorted to by the respondents - the order of the Commissioner (Appeals) is set aside and the order of the original authority is restored in this regard - appeal allowed - decided in favor of Revenue.

Summary

Issues:
Appeal against Commissioner (Appeals) order - Duty demand on shortage of goods - Clandestine removal of excess fabrics - Penalty imposition - Confiscation of assets - Reduction of penalties.

Analysis:
The case involved appeals by the Department against the Commissioner (Appeals) order regarding duty demand on shortage of goods and clandestine removal of excess fabrics. The officers found a shortage of fabrics during a visit to the factory, leading to the payment of duty on the admitted clandestine removal. Private production registers maintained by the Printing Supervisor and the admission of clandestine removal by the Director indicated unaccounted production and clearance. The original authority imposed duty demands, penalties, and confiscation of assets. The Commissioner (Appeals) upheld the duty demand for the shortage but reduced penalties.

The learned SDR argued that the respondents admitted to clandestine removal and maintained private records showing unaccounted production and clearance. The Director's admission and lack of retraction supported the findings of clandestine removal. The maintenance of private records and non-retraction of statements by responsible officials indicated the accuracy of the original authority's findings. The Director's admission under Section 14 of the Central Excise Act did not require further corroboration, and the lack of retraction strengthened the case.

Considering the submissions and evidence, the Tribunal found the Commissioner (Appeals) erred in dropping the demand for excess fabrics and reducing penalties. The original authority's findings on clandestine removal and duty demand were upheld, restoring the order. However, the confiscation of assets was deemed excessive and set aside. The Tribunal allowed the appeals on these terms, affirming the duty demand and penalties while modifying the confiscation order.

In conclusion, the Tribunal upheld the duty demand for clandestine removal, penalties, and set aside the confiscation of assets. The case highlighted the importance of admissions and non-retraction of statements in establishing clandestine activities, supporting the original authority's decision. The Tribunal's decision balanced the penalties imposed, emphasizing the seriousness of clandestine removal while considering the proportionality of asset confiscation.