2007 (10) TMI 532 - AT - Central Excise

Quantum of Penalty - Confiscation and redemption fine - clandestine removal - Rule 173Q/Rule 25 - confiscation of raw-material

Summary

Issues: Duty confirmation on clandestine removal, reduction of penalty, confiscation of under-processed goods, redemption fine, applicability of Rule 25.

1. Duty Confirmation and Penalty Reduction:
The appellant did not contest the duty confirmation of Rs. 5,59,100 on the grounds of clandestine removal. However, the appellant requested a reduction in the penalty to 25% as the entire duty was deposited before the show cause notice and 25% of the penalty was also paid within a month of the orders. Citing a precedent from the Hon'ble Delhi High Court, the Tribunal confirmed the duty demand as uncontested and reduced the penalty to 25% of the duty amount. Notably, the penalty on a specific director was set aside.

2. Confiscation of Under-Processed Goods and Redemption Fine:
The lower authorities had confiscated under-processed goods, offering the appellant the option to redeem them by paying a fine of Rs. 6 lakhs. The appellant contested this action, arguing that confiscation under Rule 173Q/Rule 25 is applicable only to finished goods, not raw materials or semi-finished goods. Relying on a previous Tribunal decision, the Tribunal agreed with the appellant that Rule 25 pertains to finished excisable goods only. Consequently, the confiscation and the redemption fine concerning the under-processed goods were set aside.

3. Disposal of Appeals:
Both appeals were disposed of in the manner described above, with the Tribunal pronouncing the operative part of the order in open court on 23-10-2007.

This judgment from the Appellate Tribunal CESTAT, Ahmedabad involved issues related to duty confirmation, penalty reduction, confiscation of under-processed goods, redemption fine, and the interpretation of Rule 25. The Tribunal upheld the duty demand due to clandestine removal but reduced the penalty to 25% of the duty amount. Additionally, the confiscation and redemption fine for under-processed goods were set aside based on the inapplicability of Rule 25 to semi-finished goods.