2008 (8) TMI 686 - AT - Central Excise

Summary

Issues:
1. Duty demand on cotton cone yarn removed clandestinely.
2. Penalty imposed under Section 11AC of the Central Excise Act.
3. Confiscation of cotton cone yarn with redemption fine.
4. Appeal for leniency based on financial hardships.

Analysis:

Issue 1: Duty demand on cotton cone yarn removed clandestinely
The lower authorities demanded duty on cotton cone yarn removed clandestinely by the appellants during a specific period. The officers found excess unaccounted stock of cotton cone yarn in the appellant's factory, leading to confiscation of goods. The appellant failed to explain the excess stock, and private records indicated the actual production and sale of the yarn under false descriptions. The buyers also confirmed the receipt of the yarn without knowledge of duty payment. The original authority demanded duty, penalty, and imposed confiscation based on the evidence presented.

Issue 2: Penalty imposed under Section 11AC
The penalty was imposed under Section 11AC of the Central Excise Act due to the clandestine removal of excisable goods. The party did not dispute the fact of clandestine clearance during the appeal. The appellate authority rejected the plea that the unaccounted stock was from the previous day's production, emphasizing the lack of entries in the register. The explanation provided by the appellants was deemed without bonafides, and the appellate authority correctly distinguished the cited case law.

Issue 3: Confiscation of cotton cone yarn with redemption fine
The seized cotton cone yarn was confiscated with an option for redemption against payment of a fine. The appellant's plea for leniency based on financial hardships was considered, citing a relevant High Court judgment. However, the Tribunal noted that the financial difficulties of the appellants were not relevant at the final hearing stage. The mandatory penalty imposed by the authorities due to clandestine removal was maintained, but the quantum of penalty was reduced to Rs. 50,000 from the original amount, considering the facts and circumstances of the case.

Issue 4: Appeal for leniency based on financial hardships
The appellant's consultant pleaded for a lenient view due to the appellants' debt to a bank and cited a relevant High Court judgment. The Tribunal acknowledged the financial situation but emphasized that it was not relevant at the final hearing stage. The mandatory penalty for clandestine removal was upheld, but the quantum was reduced after considering precedents and the specific circumstances of the case.

In conclusion, the Tribunal sustained the impugned order, reducing the penalty imposed on the appellants to Rs. 50,000 and disposing of the appeal.