2009 (4) TMI 956 - AT - Central Excise

Summary

Issues:
Non-maintenance of production-clearance records for 20 days, confiscation of unaccounted goods, imposition of penalties under Rule 25 and Rule 26, justification of penalties under Section 11AC, evidence of clandestine removal, modification of penalties, restoration of original authority's order.

Analysis:
The case involved a situation where officers found unaccounted stock during a visit to a factory premises, leading to the confiscation of goods valued at approximately Rs. 12 lakhs. The original authority imposed penalties under Rule 25 and Rule 26, along with a penalty under Section 11AC. The Commissioner (Appeals) later set aside the original authority's order, stating that the intention to remove the goods without paying the appropriate Central Excise duty was not proven. The department appealed this decision.

During the appeal, the learned DR argued that the appellant had not maintained records for 20 days and had conducted clearances during this period. The original authority's decision to confiscate the unaccounted goods and impose penalties was deemed justified. The learned DR sought the restoration of the original authority's order.

Upon careful consideration, the judge noted that the respondent had failed to maintain up-to-date records for about 20 days and had conducted clearances without proper documentation. The judge emphasized the strict obligation to maintain production-clearance records. While upholding the confiscation of unaccounted goods, the judge disagreed with the original authority's presumption that the goods were intended for clandestine removal, as there was no evidence to support this claim. Notably, no demand of duty had been confirmed despite allegations of goods being cleared before a certain date. The judge found the penalties imposed under Section 11AC and Rule 26 unjustified due to lack of evidence of clandestine removal, but acknowledged the need for some penalties for non-maintenance of accounts.

In the final decision, the judge set aside the Commissioner (Appeals)'s order and restored the original authority's decision with modifications. The confiscation was upheld, allowing redemption of goods upon payment of a fine. The penalty under Section 11AC was reduced to Rs. 2,000 for non-maintenance of records, while the penalty on the partner was set aside. The appeal was disposed of based on these terms.