2010 (8) TMI 215 - AT - Central Excise

Demand EOU - final products removed clandestinely - not being disputed and paid by the assessee - demand of duty on inputs used in finished goods cannot be sustained Penalty on the Director - statement recorded by the officers at the time of visit clearly reflect upon his knowledge and mala fide intention in clandestinely removal penalty justified Redemption of fine - no goods were seized as the same were not available for confiscation - no redemption fine could have been imposed - appeals are disposed off

Summary

Issues:
1. Clandestine removal of goods without payment of duty.
2. Confirmation of demand and imposition of penalties.
3. Redemption fine imposition.
4. Duty on raw materials when duty on final products is paid.

Issue 1: Clandestine removal of goods without payment of duty
The case involved M/s. Dupont Synthetics, a 100% EOU, where officers found shortages of rejected yarn during a factory visit. The Director confessed to clearing short-found goods without duty payment. A follow-up investigation revealed purchases without excise documents or duty payment. Show cause notices were issued, leading to demands for excise duty on clandestinely removed goods and penalties. The Commissioner (Appeals) upheld the demands and penalties, except for the redemption fine due to the unavailability of seized goods.

Issue 2: Confirmation of demand and imposition of penalties
The appellants contested the duty on raw materials after paying duty on finished goods, citing precedents. The Tribunal held that if duty on final products is paid, demand for duty on inputs used cannot be sustained. The duty on final products was confirmed, and penalties imposed were reduced to 100% of the confirmed duty. The penalty on the Director was upheld due to his involvement in the clandestine removal.

Issue 3: Redemption fine imposition
The appellants argued against the redemption fine, supported by the Commissioner (Appeals)'s decision. The Tribunal agreed that redemption fine is imposed in lieu of confiscation, providing an option to redeem goods. As the goods were physically unavailable, the option to redeem did not apply, leading to the rejection of the Revenue's appeal on the redemption fine.

Issue 4: Duty on raw materials when duty on final products is paid
The Tribunal followed precedents to set aside the demand for duty on raw materials once duty on final products is paid. The duty on final products was confirmed, penalties were imposed accordingly, and the penalty equivalent to the duty on raw materials was set aside.

In conclusion, all appeals were disposed of with the confirmation of duty on final products, reduced penalties, upheld penalty on the Director, and rejection of the Revenue's appeal on redemption fine imposition. The Tribunal emphasized the legal principles governing duty payments on finished goods and raw materials in excise cases, providing a comprehensive analysis and resolution for the issues raised in the appeals.