2009 (3) TMI 814 - AT - Central Excise

Summary

Issues:
1. Confiscation of goods and imposition of penalty without proposal in show cause notice.
2. Justification of demand of duty for excess quantity of molasses.
3. Imposition of penalty on a State Government undertaking for alleged clandestine removal of goods.

Analysis:

Issue 1: The appellant contended that confiscation of goods and imposition of penalty were unjustified as there was no proposal for confiscation in the show cause notice. The Tribunal agreed, noting that the show cause notice only proposed a demand of duty and penalty, without mentioning confiscation. As the seized goods were released provisionally, duty would be paid upon clearance, making the demand of duty before clearance unjustified. The Tribunal set aside the confiscation and redemption fine, as they were not proposed in the notice.

Issue 2: The appellant argued that the excess molasses quantity was due to foam, making the demand of duty unjustified. Citing precedents, the appellant claimed that excess molasses due to foam should not incur duty. The Tribunal acknowledged the presence of foam with molasses and the difficulty in accurately measuring the quantity based on dip reading. Relying on the precedent, the Tribunal found the charge of excess molasses unsustainable. However, the Tribunal upheld the penalty for the failure to maintain proper records of excess quantity, reducing it to Rs. 10,000 based on the circumstances.

Issue 3: The appellant, a State Government undertaking, contested the penalty for alleged clandestine removal of goods, asserting that they had not removed goods clandestinely. The Tribunal considered the circumstances and reduced the penalty to Rs. 10,000, finding it justified based on the contravention of rules regarding the excess quantity of goods. The appeal was disposed of with the penalty reduced accordingly.

In conclusion, the Tribunal set aside the confiscation and redemption fine, upheld the penalty for failure to maintain proper records, and reduced the penalty imposed on the State Government undertaking for the alleged clandestine removal of goods. The judgment provided a detailed analysis of each issue raised by the parties, citing relevant legal precedents and considerations to arrive at a reasoned decision.