2008 (10) TMI 449 - AT - Central Excise

Summary

Issues:
1. Confiscation of excess found goods and imposition of penalty.
2. Neutralization of short found grey fabric against excess found grey fabric.
3. Malafide intent for not recording raw material and finished goods in statutory records.
4. Option for redemption of seized goods.
5. Reduction of penalty from Rs. 10 lakhs to Rs. 2.5 lakhs.

Analysis:
1. The proceedings were initiated against the appellant for confiscation of excess found goods and imposition of penalty. The Assistant Commissioner passed an order confiscating the excess processed fabrics and grey fabric, along with imposing a penalty of Rs. 10 lakhs on the appellant.

2. The Tribunal found that there was enough evidence to show that excess found fabric was manufactured from grey fabric not recorded in statutory records, indicating a clandestine purpose. The appellant's plea to neutralize short found grey fabric against excess found grey fabric was rejected due to discrepancies in lot numbers, suggesting a deliberate attempt to evade duty payment.

3. Referring to a previous ruling, the Tribunal highlighted that failure to account for goods could lead to confiscation and penalty, even without mens rea. In this case, the Tribunal concluded that the appellant acted with malafide intent by not recording raw material and finished goods in statutory records, indicating an intention to evade duty payment.

4. While agreeing that absolute confiscation was not necessary, the Tribunal acknowledged the appellant should have been given an option to redeem the seized goods by paying a redemption fine. However, due to the fabric's deterioration over six years, the option for redemption was deemed ineffective. The penalty was reduced to Rs. 2.5 lakhs considering the full confiscation of goods worth Rs. 15 lakhs, depriving the appellants of ownership.

5. Ultimately, the appeal was allowed with the reduced penalty amount pronounced in court on 6-10-2008. The decision aimed to balance the penalty imposed with the value of the confiscated goods, taking into account the circumstances surrounding the case.