2010 (4) TMI 642 - AT - Central Excise

Redemption of fine - goods were cleared from the factory without payment of duty - confiscation of goods - goods released provisionally on bank guarantee and bond - Held that - plea that goods not available for confiscation , cannot be entertained - Immunity from penalty and prosecution is granted to the applicant under the Central Excise Act, 1944 and any other central acts - Quantum of fine reduced - appeal is disposed off

Summary

Issues Involved:
1. Confiscation of goods seized from M/s. Kanta Enterprises.
2. Imposition of redemption fine and penalties on M/s. Kanta Rubber Pvt. Ltd.
3. Applicability of Settlement Commission's order on the confiscation issue.

Detailed Analysis:

1. Confiscation of Goods Seized from M/s. Kanta Enterprises:
The respondents, manufacturers of rubber products, were alleged to have clandestinely removed goods without paying duty. Goods were seized from M/s. Kanta Enterprises' godown, and a show cause notice dated 13-7-2006 was issued proposing confiscation under Rule 25 and Section 120 of the Customs Act, 1962. The adjudicating authority ordered confiscation and imposed a redemption fine of Rs. 1 lakh. However, the Commissioner (Appeals) set aside the confiscation, reasoning that the goods were not available for confiscation as they were provisionally released. This reasoning was found incorrect by the Tribunal, citing the Supreme Court's ruling that provisional release does not negate the possibility of confiscation.

2. Imposition of Redemption Fine and Penalties on M/s. Kanta Rubber Pvt. Ltd.:
The adjudicating authority imposed a penalty on M/s. Kanta Enterprises but did not impose any penalty on M/s. Kanta Rubber Pvt. Ltd. The Revenue appealed, arguing that the Commissioner (Appeals) should have imposed a penalty on M/s. Kanta Rubber Pvt. Ltd. The Tribunal noted that the Settlement Commission granted immunity from penalties and prosecution to M/s. Kanta Rubber Pvt. Ltd. and its director, but not from fines. Consequently, the Tribunal found the Commissioner (Appeals)'s decision to set aside the redemption fine incorrect and reduced the fine from Rs. 1 lakh to Rs. 25,000.

3. Applicability of Settlement Commission's Order on the Confiscation Issue:
M/s. Kanta Rubber Pvt. Ltd. approached the Settlement Commission regarding a separate show cause notice dated 12-1-2007, which demanded duty for the period from 6-4-2002 to 10-1-2006. The Settlement Commission settled the duty liability and granted immunity from penalties and prosecution. The Commissioner (Appeals) erroneously applied this settlement to the confiscation issue from the 13-7-2006 notice. The Tribunal clarified that the Settlement Commission's order did not cover confiscation, which was the primary focus of the 13-7-2006 notice. Thus, the Tribunal upheld the adjudicating authority's decision on confiscation but modified the redemption fine.

Conclusion:
The Tribunal set aside the Commissioner (Appeals)'s order to the extent that it nullified the confiscation and redemption fine imposed by the adjudicating authority. The Tribunal reduced the redemption fine to Rs. 25,000, maintaining the confiscation order. The Settlement Commission's immunity from penalties and prosecution did not extend to the confiscation issue, and the provisional release of goods did not preclude their confiscation. The appeal was disposed of accordingly.