2011 (1) TMI 633 - AT - Central Excise

100% EOU - . These factors will be relevant to determine the fulfillment of obligations by a 100% EOU and also whether the goods can be treated to have been exported by the appellant themselves. Even though these submissions were made by the appellant, lower authorities have ignored them on the ground that the goods were manufactured without permission and therefore the duty liability is attracted. Whether the duty can be demanded on the goods which have been exported and whether the goods have been exported at all as claimed by the appellants, whether the export benefits have been derived by the domestic unit, are required to be considered and matter examined in detail as to whether the duty is demandable. As regards penalty, it is directly relatable to the value of the goods manufactured and confiscated. Since we have already held that a lenient view is called for as regards confiscation and redemption fine, the corresponding reduction in the penalty is warranted. This is especially in view of the fact that no evidence of clandestine removal of any goods has been brought out.

Summary

Issues: Confiscation of goods, imposition of penalties, duty liability on raw materials, maintenance of proper accounts, export obligations fulfillment

In the judgment delivered by the Appellate Tribunal CESTAT, AHEMDABAD, the case involved the confiscation of pharmaceutical products manufactured by an appellant, a 100% EOU, valued at Rs.16,59,228/- due to alleged unauthorized manufacturing and non-accounting of goods. The appellant, M/s Lacure Pharmaceuticals Ltd., faced penalties and duty demands on finished products under Central Excise and Customs Acts. The appellant claimed that the goods were manufactured for and on behalf of another entity, M/s Intermed, and fulfilled export obligations as per EXIM policy. The Tribunal considered submissions regarding the manufacturing process, permissions, and fulfillment of export obligations. The Tribunal noted discrepancies in the manufacturing process and lack of proper documentation, leading to the sustained confiscation of goods valued at Rs.11,40,959/- and penalties. The appellant's failure to maintain proper accounts and non-entry of goods in daily stock accounts were highlighted, leading to the sustained confiscation of unaccounted goods valued at Rs.5,18,269/-. Despite the ultimate export of all goods, the appellant's lack of valid reasons for non-accounting warranted a nominal redemption fine. The Tribunal emphasized the need for detailed examination regarding duty liability on exported goods and penalties reduction based on the lenient view taken on confiscation. The matter was remanded to the adjudicating authority for further determination on duty payment, with reductions in fines and penalties imposed on the appellant and the director. The judgment concluded with the reduction of fines and penalties on M/s Lacure Pharmaceuticals and the director under Central Excise Rules and Customs Act, respectively.

In conclusion, the judgment addressed issues related to the confiscation of goods, imposition of penalties, duty liability on raw materials, maintenance of proper accounts, and the fulfillment of export obligations by a 100% EOU. The Tribunal scrutinized the manufacturing processes, permissions, and documentation to determine violations leading to confiscation and penalties. The importance of maintaining proper accounts and fulfilling mandatory requirements was emphasized, even though all goods were eventually exported. The Tribunal highlighted the need for a detailed examination of duty liability on exported goods and recommended reductions in fines and penalties based on a lenient view taken on confiscation. The remand to the adjudicating authority aimed to provide a fair opportunity for the appellant to address duty payment issues, with adjustments in fines and penalties to reflect the Tribunal's considerations.