2016 (1) TMI 1251 - AT - Central Excise

100% EOU - clandestine removal - supply of goods without issuance of invoice - confiscation - penalty - Held that - once the CT 3 certificate was issued the duty liability if at all arises stands shifted to the recipient who has issued the CT3 certificate and the appellant s clearances are covered by CT 3 is not chargeable to duty. I find that there is indeed delay in obtaining the CT3 certificate but same can be considered as procedural lapse. SCN issued on 29-5-2000, at that time sub Rule 173Q (2) was not in force and the saving clause which was brought is Section 38A is effective from 11-5-2001 therefore there was no machinery provisions of sub rule (2) of 173Q on the date of issue of SCN, therefore confiscation of land, building etc is illegal accordingly, redemption find of ₹ 1 lacs is hereby dropped - As regard the redemption fine of ₹ 89,206/- on the confiscation goods valued of ₹ 3,56,825/-, I find that goods valued at ₹ 1,40,819/- were seized at premises of M/s. Volent Textile Mills Ltd at that stage, the goods did not belong to appellant therefore redemption fine cannot be demanded from appellant, however some redemption fine is warranted. Taking into consideration value of the goods seized at premises of M/s. Volent Textile Mills Ltd and other aspect I reduce the redemption fine of ₹ 89,206/- to ₹ 40,000/-. As regard the penalty of ₹ 4, 24, 373/- imposed under Section 11AC on the appellant, I find that since the duty liability was reduced as discussed above the said penalty shall also stands reduced to the duty stand confirmed as per the above discussion. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
1. Duty demand on alleged clandestine removal of goods.
2. Confiscation of goods and imposition of redemption fine.
3. Personal penalties imposed under Rule 209A.

Analysis:

Issue 1: Duty Demand on Alleged Clandestine Removal of Goods
The case involved the appellant, a composite mill, supplying goods to another company without payment of duty or issuing invoices. The Anti Evasion wing discovered this practice, leading to a show cause notice for duty demand and confiscation. The adjudicating authority confirmed the duty demand, penalties, and confiscation. The Commissioner(Appeals) upheld most aspects, prompting the appeal. The appellant argued against the duty demand, citing CT 3 certificate submission and retracted statements. The Tribunal considered the evidence, including admissions and corroborating statements. It upheld the duty demand for past clearances, reducing the penalty in line with the revised duty amount.

Issue 2: Confiscation of Goods and Imposition of Redemption Fine
Regarding the confiscation and redemption fine, the appellant contested the legality based on rule omissions and ownership of seized goods. The Tribunal analyzed the legal provisions and found the confiscation under Rule 173Q invalid due to rule omission at the time of the show cause notice. It also clarified the ownership of seized goods, reducing the redemption fine accordingly to reflect the appellant's liability accurately.

Issue 3: Personal Penalties Imposed under Rule 209A
The penalties imposed on individuals under Rule 209A were challenged, with the Tribunal considering the evidence and arguments. It upheld some penalties while setting aside others based on the involvement and retracted statements of the individuals. The Tribunal's decision balanced the culpability of each party involved, ensuring fairness in the imposition of penalties.

In conclusion, the Tribunal partially allowed the appeal by modifying the duty demand, confiscation, and penalties based on a thorough analysis of the evidence and legal provisions. The judgment clarified the liabilities of the appellant and individuals involved, ensuring a just outcome in line with the applicable laws and precedents.