2011 (7) TMI 336 - AT - Central Excise

Clandestine removal - Penalty of Rs.1,38,205/- imposed under Rule 25 and redemption fine of Rs.1,92,700 - excess stock 400 boxes extra found- As regards the submission that the quantity has not been worked out correctly, it is found that the quantity of 18,485 boxes has been arrived at on the basis of production memos which were recovered during the visit of the officers to the factory - the statement submitted by the appellants in the appeal memorandum it has shown that broken and damaged quantity as 825 - On verification of production memo, it was seen that broken/damaged tiles are accounted in terms of Kgs whereas the statement in the appeal memorandum gives feeling that broken/damaged tiles are accounted in the boxes in the production memos which is definitely contrary to the facts - Therefore 825 boxes shown as broken/damaged has to be ignored. This results in the conclusion that the actual quantity found in excess may not have been 21,018 boxes - However, since this is only relevant for the purpose of calculation of redemption fine and penalty, consider it not worthwhile remanding the matter for verification of this aspect only - it appropriate that redemption fine imposed for release of the confiscated goods has to be reduced to Rs.1.25 lakhs and penalty to Rs.1 lakh.

Summary

Issues:
1. Excess quantity of ceramic glazed tiles found during transit checks and factory visit.
2. Imposition of penalty and redemption fine under Central Excise Rules, 2002.
3. Dispute over whether excess stock was intended for clandestine removal.
4. Calculation discrepancies in the quantity of excess stock found.
5. Appeal against the imposition of penalty and redemption fine.

Issue 1: Excess quantity of ceramic glazed tiles found during transit checks and factory visit:
The appellant, engaged in manufacturing ceramic glazed tiles, had excess quantities of tiles found both in a truck during transit checks and in the factory during a follow-up visit. The excess stock in the truck and factory were 400 boxes and 21,018 boxes, respectively. This led to the imposition of a penalty and redemption fine under Rule 25 of the Central Excise Rules, 2002.

Issue 2: Imposition of penalty and redemption fine under Central Excise Rules, 2002:
A penalty of Rs.1,38,205/- and a redemption fine of Rs.1,92,700 were imposed in relation to the excess ceramic glazed tiles found. The appellant contested these penalties and fines through an appeal.

Issue 3: Dispute over whether excess stock was intended for clandestine removal:
The appellant argued that there was no evidence to suggest that the excess stock found was meant for clandestine removal. Citing various legal precedents, the appellant claimed that unless there was evidence of clandestine intentions, confiscation and penalty could not be justified. However, the Departmental Representative contended that the circumstances indicated an intention for clandestine removal, especially since the excess stock was discovered after intercepting a truck carrying unaccounted goods.

Issue 4: Calculation discrepancies in the quantity of excess stock found:
The appellant raised concerns about discrepancies in the calculation of the excess stock, pointing out errors in the quantity assessment. The appellant also highlighted that broken and damaged boxes were not accounted for in the calculations, leading to a dispute over the accurate quantity of excess stock.

Issue 5: Appeal against the imposition of penalty and redemption fine:
After considering submissions from both sides, the Tribunal found that the excess stock was likely kept for clandestine removal due to the circumstances of interception and subsequent findings. While acknowledging discrepancies in the quantity calculations, the Tribunal decided not to remand the matter for verification, opting instead to take a lenient view on the penalty. Consequently, the redemption fine was reduced to Rs.1.25 lakhs, and the penalty to Rs.1 lakh, while upholding the imposition of penalties and fines. The appeal was rejected based on the overall assessment of the case.

This detailed analysis of the judgment provides insights into the issues raised, legal arguments presented, and the Tribunal's decision-making process regarding the penalties and fines imposed in the case of excess ceramic glazed tiles found during transit checks and factory visits.