2008 (1) TMI 767 - AT - Central Excise

Summary

Issues:
- Confiscation and imposition of fine and penalty for issuing Modvat invoices without delivering the material.
- Allegation of non-accountal of goods leading to confiscation and penalty.
- Applicability of Rule 173Q of Central Excise Rules, 1944.
- Justification of penalty on the authorized signatory.

Analysis:
1. The appeal was filed against the confiscation and imposition of fine and penalty for issuing Modvat invoices without delivering the material. The Central Excise officers found excess goods in the godown without proper accounting, leading to the show cause notice proposing confiscation and penalties. The Adjudicating Authority dropped the proceedings, but the Commissioner (Appeals) confiscated goods and imposed penalties on both appellants.

2. The appellant argued that there was no allegation of wrongly availing credit, making confiscation and penalty unsustainable. The authorized signatory, an employee, claimed ignorance of the confiscable nature of goods. The learned Advocate cited Tribunal decisions to support the argument against the penalties.

3. The Department reiterated the Commissioner (Appeals) findings, emphasizing that excess goods seized indicated issuance of invoices without removing the goods, violating rules.

4. Upon review, it was found that the Central Excise officers discovered excess goods without proper accounting, violating Rule 52AA. However, there was no evidence of issuing modvatable invoices without delivering the material. The Adjudicating Authority noted the lack of storage space affecting proper storage and verification. The Commissioner (Appeals) cited Rule 52A for confiscation, which was deemed inapplicable.

5. The show cause notice did not specify a violation of Rule 173Q. The Tribunal's precedent showed that non-accountal of goods within the factory did not attract confiscation under Rule 173Q. Due to storage space shortage causing irregularities, confiscation was deemed unjustified, but penalties were justified for rule contravention.

6. Considering the case's circumstances, the confiscation and fine were set aside, reducing the penalty to Rs. 10,000 on appellant No. 1. The penalty on Appellant No. 2 was annulled, and the appeal was allowed.