2009 (12) TMI 772 - AT - Central Excise

Summary

Issues:
Excess stock confiscation and penalty reduction for non-accountal of goods by SSI unit.

Analysis:
The case involves the confiscation of excess stock found at the factory of the appellants, who are manufacturers of fireworks, by Central Excise Officers. The stock was valued at approximately Rs. 22.68 lakhs and seized on the grounds of being liable to confiscation. A show-cause notice was issued proposing confiscation and penal action, without any demand for duty as the appellant was within the Small Scale Industries (SSI) exemption limit for clearances. The Additional Commissioner adjudicated the case, confiscating the excess stock with an option of redemption upon payment of a fine of Rs. 2,50,000/- and imposing a penalty of Rs. 1 lakh on the appellants. The lower appellate authority later set aside the redemption fine and reduced the penalty to Rs. 5,000/- due to non-accountal of the goods, leading to the current appeal.

The Commissioner (Appeals) relied on the decision of the Tribunal in previous cases such as Shakti Thamba Tar Pvt. Ltd. and Shanti Fastners, where confiscation of goods from SSI units not demanded duty was set aside. The Tribunal's decision in Shanti Fastners was upheld by the Punjab and Haryana High Court. Following the precedents set by these cases, the appellate tribunal upheld the impugned order and rejected the appeal.

In a separate judgment by Member (T), it was noted that while intention to evade duty is not essential for confiscation and penalty under Rule 173Q of the Central Excise Rules, 1944, cases of non-accountal of production and removal of goods without proper documentation can justify confiscation and penalty. However, there have been instances of leniency towards small scale manufacturers operating within exemption limits, with cautions to maintain proper accounts and clear goods under proper documentation. In the current case, the lower appellate authority's lenient view in reducing the penalty to a token amount of Rs. 5,000/- was considered appropriate given the circumstances, leading to the agreement on rejection of the appeal and dismissal of cross-objection.

In conclusion, the judgment upholds the decision to set aside the redemption fine and reduce the penalty for non-accountal of goods by the SSI unit, in line with previous precedents and leniency shown towards small scale manufacturers within exemption limits.