2009 (4) TMI 692 - AT - Central Excise

Summary

Issues:
1. Confiscation and redemption of seized goods.
2. Discrepancy in the amount of duty demanded for shortage of finished goods.
3. Enhancement of fine in lieu of confiscation.
4. Rectification of accounting mistake for shortage of finished goods.
5. Liability of the assessee for penalties under relevant provisions of law.

Confiscation and Redemption of Seized Goods:
The original authority confirmed a demand of duty on unaccounted goods and imposed penalties under relevant sections of the Central Excise Act and Rules. The Commissioner (Appeals) upheld the confiscation of goods and increased the redemption fine. However, the appellate authority set aside the enhancement of fine, restricting it to the original amount of Rs. 10,000. The appellate judge found a breach of natural justice in enhancing the fine without notice to the affected party.

Discrepancy in Duty Demand for Finished Goods:
The dispute over the shortage of finished goods led to a difference in the amount of duty demanded between the show-cause notice and the order-in-original. The appellate authority noted a communication gap and remanded the case to reconcile the discrepancy. The appellate judge upheld the demand of duty confirmed by the original authority, emphasizing the need to rectify the accounting mistake.

Enhancement of Fine in Lieu of Confiscation:
The appellate judge set aside the enhancement of the redemption fine from Rs. 10,000 to Rs. 15,000, citing a breach of natural justice as the affected party was not given notice of the proposed increase. The enhancement was deemed invalid, and the fine amount was restricted to the original sum.

Rectification of Accounting Mistake for Finished Goods:
The managing director of the appellant company admitted to the shortage of finished goods and offered to rectify the accounting error. However, no reconciliation statement was called for or furnished by the authorities. The appellate judge found the plea of an accounting mistake unsubstantiated, holding the goods were clandestinely removed to DTA without appropriate duty payment.

Liability for Penalties under Relevant Provisions:
The lower appellate authority did not address the issue of penalties under the law for the unaccounted and short goods. The appellate judge remanded the matter to consider whether the assessee should be penalized under Section 11AC of the Act or Rule 25 of the Rules. The assessee was to be given a fair opportunity to be heard on this penalty-related issue.

In conclusion, the appeal was disposed of with directions to address the penalty issues and ensure a fair hearing for the assessee regarding potential penalties under the relevant legal provisions.