2007 (4) TMI 62 - AT - Central Excise

Confiscation and penalty - Alleged that appellant is cleared from the premises without preparing document and without payment of duty to the job worker and accordingly demand were made alongwith fine and penalty - Held that allegation was correct and demand fine and penalty sustained

Summary

Issues:
1. Duty evasion and penalty imposition on a 100% EOU for unauthorized removal of non-duty paid raw materials.
2. Justification of duty demand and confiscation of goods without proper documentation.
3. Reduction of redemption fine and penalty imposed on the appellant company.
4. Assessment of penalty on the Director of the appellant company.

Analysis:
1. The case involved a 100% EOU importing yarn as raw material without duty payment for manufacturing grey fabrics for export. The officers found discrepancies in the register for goods removal to a job worker, indicating unauthorized clearance of raw materials without proper documentation. The adjudicating authority confiscated the goods, demanded duty payment, and imposed penalties on the appellant company and its director. The Commissioner (Appeals) upheld this decision.

2. The appellant argued no intention to evade duty, stating that the seized goods were used in manufacturing and subsequently exported. However, the tribunal found the removal of non-duty paid materials without documentation unjustified, leading to the duty demand and confiscation being upheld. The penalty was deemed warranted due to the unauthorized removal, but the appellant could claim export benefits following prescribed procedures.

3. After considering the facts, the tribunal reduced the redemption fine and penalty imposed on the appellant company from Rs. 25,000 and Rs. 54,479 to Rs. 10,000 each. The penalty on the director was set aside as he was not directly involved in the clearance to the job workers, giving him the benefit of the doubt.

4. In conclusion, the appeals were disposed of with the modified terms of reduced fines and penalties for the appellant company, and the penalty on the director being set aside based on lack of direct responsibility in the unauthorized removal of goods.