2011 (8) TMI 957 - AT - Central Excise

Search and seizure - Penalty - Confiscation - Director of the appellant Company is in appeal against the personal penalty of Rs. One lakh imposed on him. Learned counsel submitted that penalty under section 11AC of Central Excise Act imposed on the appellant company has also been paid - Having regard to the quantum of duty evaded and attitude of the appellants and facts and circumstances of the case, I consider it appropriate that penalty on the Director has to be reduced and lenient view is required to be taken - penalty imposed on the Director is reduced to Rs. 25,000

Summary

Issues: Duty demand with interest, penalty under Section 11AC of Central Excise Act, redemption fine, personal penalty imposed on the Director.

Duty Demand with Interest:
The case involved M/s. Gandhi Capitals Pvt. Limited, a 100% EOU engaged in manufacturing Texturised Yarn and Twisted Yarn. A shortage of 8220 Kgs of raw material was found during a search, leading to the confession of illicit clearance without payment of Central Excise duty. The appellant paid Customs duty of Rs. 3,08,398/-. The impugned order confirmed duty demand with interest, imposed penalty under Section 11AC of Central Excise Act, and upheld the redemption fine. Both Revenue and appellant appealed. The Tribunal upheld the decision allowing a reduced penalty if paid within 30 days, citing relevant precedents. The appeal by Revenue was rejected.

Redemption Fine:
M/s. Gandhi Capital Pvt. Limited appealed against the redemption fine. The appellant argued that as the goods were not available for confiscation, redemption fine should not have been imposed. Referring to a Tribunal decision, it was noted that redemption fine can only be imposed on seized goods or those in Revenue's possession. As no goods were seized in this case, the Tribunal set aside the redemption fine.

Personal Penalty Imposed on the Director:
The Director of the appellant Company appealed against the personal penalty of Rs. One lakh imposed on him. The appellant had paid the penalty under Section 11AC of Central Excise Act and cooperated in the investigation. Considering the circumstances, the penalty on the Director was reduced to Rs. 25,000, taking a lenient view due to the amount of duty evaded and the appellant's cooperation.

Conclusion:
The Tribunal disposed of all appeals by reducing the penalty on the Director, setting aside the redemption fine, and upholding the duty demand with interest. The decision highlighted the importance of timely payment of duty and penalties, as well as the need for appropriate penalties based on the circumstances of each case.