2009 (11) TMI 803 - AT - Central Excise

Summary

Issues:
Transfer of finished goods between two units of the same manufacturer, violation of Central Excise Rules, imposition of penalties, reduction of fines and penalties by the Commissioner (Appeals), determination of intention to evade excise duty.

Transfer of Finished Goods:
The case involved the transfer of finished goods from one unit to another of the same manufacturer. The department argued that separate penalties were justified due to different excise registrations, but the Tribunal found that having two premises did not make them separate legal entities. The goods were properly recorded in the daily stock register of Unit No. 1 and were sent to Unit No. 2 for export purposes. The Commissioner concluded that while there was improper maintenance of accounts, there was no intention to evade excise duty. The Tribunal upheld this finding, noting that no duty was demanded as the goods were exported, and that Unit No. 2 was not a separate legal entity.

Violation of Central Excise Rules:
The department contended that Rule 10(1) of the Central Excise Rules, 2002 was violated due to improper record-keeping. However, the Tribunal found that the case did not involve intentional evasion of duty, as the goods were properly recorded and exported. The Commissioner's decision to reduce fines and penalties was justified based on the lack of evidence supporting the department's claims of deliberate evasion.

Imposition of Penalties:
The original authority had imposed fines and penalties on both units for procedural lapses, but the Commissioner (Appeals) reduced these amounts considering the lack of intention to evade duty. The Tribunal agreed with the Commissioner's assessment, emphasizing that the goods were exported and no duty was demanded. It was concluded that the penalties on the second unit were not warranted, as it was not a separate legal entity.

Reduction of Fines and Penalties:
The Commissioner (Appeals) had reduced the redemption fine and penalties imposed on the units, considering the circumstances of the case. The Tribunal upheld this decision, stating that the leniency shown was justified given the lack of evidence supporting intentional duty evasion. The order of the Commissioner (Appeals) in setting aside the penalty on the second unit was deemed appropriate.

Intention to Evade Excise Duty:
The Tribunal analyzed the case to determine whether there was an intention to evade excise duty. It was found that the goods were transferred for legitimate export purposes, as claimed by the respondents. The lack of evidence supporting intentional evasion, coupled with the proper recording of goods and their exportation, led to the conclusion that no valid grounds existed to interfere with the Commissioner (Appeals)'s decision.

In conclusion, the appeal by the department was rejected as the Tribunal found no valid reasons to overturn the order of the Commissioner (Appeals) based on the lack of evidence supporting intentional evasion of excise duty and the proper recording and exportation of goods between the manufacturer's units.