2009 (3) TMI 850 - AT - Central Excise

Summary

Issues:
1. Imposition of redemption fine in lieu of confiscation of goods under Central Excise Act.
2. Liability of a person acquiring goods with knowledge of non-duty-paid character for penalty under Rule 26 of Central Excise Rules.

Analysis:
1. The first issue in the appeal was regarding the imposition of a redemption fine of Rs. 40,000 in lieu of confiscation of goods clandestinely removed without payment of central excise duty. The factory manager confessed to the clandestine removal of goods valued at Rs. 2,04,679 to another company. The Assistant Commissioner ordered confiscation of goods and imposed a fine of Rs. 40,000. The appeal against this order was dismissed by the Commissioner (Appeals). The question arose whether the goods were liable for confiscation under Rule 25 and if a fine could be imposed in lieu of confiscation. The Larger Bench decided against the Revenue, setting aside the redemption fine as it could not be sustained. Hence, the appeal was allowed.

2. The second issue involved Mr. Prakash M. Patel, who acquired goods without statutory invoices evidencing payment of duty. The department found that he was aware of the non-duty-paid character of the goods purchased from another company. The show-cause notice proposed to penalize him under Rule 26 for being concerned with goods liable for confiscation. The penalty imposed was Rs. 16,500, which was upheld by the Commissioner (Appeals). It was argued that there was no monetary gain as duty was paid by the supplier and appellant promptly. However, it was found that Mr. Patel was aware of the offense committed by the supplying company. Although the penalty was reduced to Rs. 10,000, it was upheld as Mr. Patel had knowledge of the non-duty-paid character of the goods received. The appeal by Mr. Patel was dismissed.

In conclusion, the appellate tribunal ruled in favor of the appellant regarding the redemption fine but upheld the penalty imposed on Mr. Patel for acquiring goods with knowledge of their non-duty-paid character. The judgments were based on the provisions of the Central Excise Act and Rules, ensuring compliance with excise duty regulations and penalties for offenses committed.