2008 (7) TMI 831 - AT - Central Excise

Confiscation and penalty - Clandestine removal - Held that - In the present case, no Cenvat credit was availed on the raw materials - further, the raw material was received by the assessee. Therefore, this cannot come under the category of excisable goods - appeal dismissed - decided against Revenue.

Summary

Issues:
- Confiscation and penalty imposed on excess raw material and finished goods
- Confiscation and penalty on Director of the company
- Appeal against the order of Commissioner (Appeals) for enhancement of penalty and confiscation

Analysis:
1. Confiscation and penalty on excess raw material and finished goods:
The case involved the confiscation and penalty imposed on excess raw material and finished goods found during a visit to the respondent's factory. The Adjudicating Authority had confiscated the seized goods, imposed a redemption fine, confirmed duty demand on excess finished goods, and imposed penalties. The Commissioner (Appeals) modified the order, setting aside confiscation and redemption fine, reducing penalties, and ultimately rejecting the appeal filed by the Revenue for enhancement of penalty and confiscation. The Commissioner (Appeals) reasoned that there was no provision for confiscation of raw materials and work in progress, and unless there was corroborative evidence of clandestine removal, penalty imposition was justified. The Tribunal's consistent view was that there is no provision for confiscation of unaccounted raw material, and penalties can be imposed. In this case, since no Cenvat credit was availed on the raw materials, they could not be confiscated.

2. Confiscation and penalty on Director of the company:
The Adjudicating Authority had imposed a personal penalty on the Director of the company. However, the Commissioner (Appeals) set aside the penalty on the Director, citing reasons based on previous tribunal decisions and the absence of evidence proving the Director's involvement in any wrongdoing. The Tribunal had held in earlier cases that penalties on directors could not be imposed unless their involvement was proven beyond doubt. In this instance, the Commissioner (Appeals) found no justification for penalizing the Director, and the Tribunal upheld this decision, rejecting the appeal against the Director's penalty.

3. Appeal against the order of Commissioner (Appeals) for enhancement of penalty and confiscation:
The Revenue had filed appeals against the order of the Commissioner (Appeals) seeking enhancement of penalties and confiscation. However, after considering the arguments from both sides and examining the case records, the Tribunal found no reason to interfere with the order of the Commissioner (Appeals). The Tribunal upheld the decision of the Commissioner (Appeals) to set aside confiscation and redemption fine, reduce penalties, and reject the Revenue's appeals for enhancement. The Tribunal's decision was based on the lack of evidence supporting the Revenue's claims and the legal principles regarding confiscation and penalties for unaccounted raw materials and finished goods.

In conclusion, the Tribunal dismissed the appeals filed by the Revenue, upholding the order of the Commissioner (Appeals) regarding penalties and confiscation. The judgment highlighted the importance of evidence, legal provisions, and precedents in determining confiscation and penalties in excise law cases.