2009 (12) TMI 752 - AT - Central Excise

Summary

Issues:
1. Confiscation of excess stock of goods.
2. Imposition of penalties on the company and the director.
3. Proper maintenance of accounts and intention of clandestine removal.
4. Justification of penalties and redemption fine.

Confiscation of Excess Stock of Goods:
The case involved the confiscation of excess stock of 96.493 MT of finished goods valued over Rs. 25 lakhs found during a visit by DGCEI officers to the factory premises. The appellant director admitted the excess but could not explain the reason for it. The original authority confiscated the goods but allowed redemption on payment of a fine. The Commissioner (Appeals) upheld the order of the original authority, leading to an appeal. The appellate tribunal upheld the confiscation of goods and the redemption fine, considering the substantial excess stock and improper maintenance of accounts.

Imposition of Penalties on the Company and the Director:
Penalties were imposed on the appellant company and the director by the original authority, which were upheld by the Commissioner (Appeals). The appellant argued that the stock taking was not done properly, and there was no intention to clear the goods clandestinely. The tribunal found that the penalty imposed on the company under Section 25 was not justified due to lack of evidence for clandestine removal. The penalty was converted into a reduced amount of Rs. 5,000. As for the penalty on the appellant director, it was set aside as there were no specific allegations against him.

Proper Maintenance of Accounts and Intention of Clandestine Removal:
The appellant company argued that the stock taking was not done accurately and that there was no intention to clear the goods clandestinely. The tribunal found that while there was excess stock and improper accounting, there was no direct or corroborative evidence to support the claim of clandestine removal. The tribunal concluded that the penalty imposed on the company was not justified under Section 25 and reduced it to Rs. 5,000.

Justification of Penalties and Redemption Fine:
The tribunal carefully considered the submissions from both sides and found that while the confiscation of excess goods and the redemption fine were upheld, the penalty on the company was reduced due to improper accounting practices. The penalty on the director was set aside as there were no specific allegations or findings against him. The appeals were disposed of with the confiscation of goods and redemption fine being upheld, the penalty on the company reduced, and the penalty on the director set aside.