2010 (7) TMI 596 - AT - Customs

Confiscation, redemption fine and penalty - Clandestine removal - The stock taking has been done in the presence of independent witnesses and in the presence of authorised signatory - There has not been any representation alleging that the stock taking was not conducted properly - The respondent that they are manufacturing very many varieties of CTD bars, each one having different dimensions and consequently, the weight of each and every piece is different - Hence, the CTD bars are meant for specific application and each variety has fairly accurate weight and the variation in weight in respect of any variety of bars cannot differ widely - The respondent that they have individually weighed each CTD bars before entering in RG-1 register - These circumstances, the correctness of panchanama drawn on the basis of weighment taken cannot be doubted without adducing any valid reason - The Commissioner (Appeals) has held that it was practically impossible for weighing of each piece of CTD bars within 9 hrs. and 15 minutes - Such a finding is based on presumption that each piece was required to be weighed which is not warranted in the nature of the goods - Have not been shown any retraction of the statement given by the authorised signatory - The irregular maintenance of accounts by not entering correctly the quantum of goods manufactured is clearly established - Finding of the original authority that the said goods were kept for clandestine removal has been rightly found to be erroneous as the same would be only a presumption. Held that the order of the Commissioner (Appeals) in setting aside the order of confiscation and setting the penalty are not justified - Some leniency in the matter of quantum of redemption fine and penalty is justified.

Summary

Issues:
- Appeal against Commissioner (Appeals) setting aside original authority's order related to M/s. Sarada Steel Industries Ltd.
- Discrepancy in physical stock of CTD bars and scrap found during inspection.
- Allegation of suppression of production and clandestine removal based on seized documents.
- Confiscation of excess stock, imposition of penalty, and redemption fine.
- Dispute regarding the method and accuracy of stock verification.
- Justification of original authority's decision versus Commissioner (Appeals) decision.
- Consideration of circumstantial evidence and submissions from both sides.

Analysis:
1. The Department appealed against the Commissioner (Appeals) decision setting aside the original authority's order concerning M/s. Sarada Steel Industries Ltd. The case involved discrepancies in the physical stock of CTD bars and scrap found during an inspection conducted by DGCEI and Central Excise Commissionerate. The officers also seized documents suggesting suppression of production and clandestine removal, leading to the original authority's decision to confiscate excess stock and impose penalties.

2. The Department argued that the stock verification was conducted meticulously in the presence of witnesses and the company's authorized signatory. The authorized signatory admitted the excess stock during a subsequent statement, supporting the allegation of offending goods not recorded in production records. The Department sought to overturn the Commissioner (Appeals) decision and reinstate the original authority's order based on circumstantial evidence and the admission of excess stock.

3. The Respondent's advocate contended that the method used for determining excess finished goods lacked clarity, as weighment sheets were not provided, and the time frame for weighing each CTD bar was deemed impractical. The advocate argued that the presumption of clandestine removal based on excess stock was unwarranted, emphasizing that the goods were within the factory premises. The advocate also referenced Tribunal decisions supporting non-confiscation of goods found within the factory.

4. The Tribunal carefully considered both parties' submissions and the evidence presented. It noted that the stock verification was conducted in a standard manner with no prior objections raised by the Respondent. The Tribunal emphasized the uniform weight of CTD bars and the lack of individual weighing before entry in the register. It found the Commissioner (Appeals)'s presumption of individual weighing impractical and upheld the original authority's decision regarding irregular accounts maintenance but rejected the presumption of clandestine removal.

5. Consequently, the Tribunal partially allowed the Department's appeal, upholding the confiscation of excess goods but reducing the redemption fine and penalty imposed on M/s. Sarada Steel Industries Ltd. The modification included a reduced redemption fine from Rs. 4,44,000 to Rs. 2,50,000 and a penalty reduction from Rs. 2,17,046 to Rs. 1,00,000. The Tribunal concluded that while irregularities were established, leniency in penalties was justified given the circumstances.