2011 (2) TMI 817 - AT - Central Excise

Demand of the duty- Entries were not made regarding the clearance of 9010 quintals of Sugar in the satautory records RG-1 - It is undisputed that the 9010 quintals of Sugar which was intercepted by the authorities at the Srikakulam Railway sliding was being transported under Delivery challans and not under duty paying documents - It is also undisputed that the said consignments were accompanied with Delivery challans and on physical verification of the stocks, it was noticed that only 9010 quintals of Sugar was found short in the factory premises - Held that the duty liability on the said goods arises and having been discharged by the assessee, the impugned order to that extent is upheld. As regards the redemption fine imposed by the lower authorities on the confiscation of the Sugar and lorries transported the said Sugar, I find that since there was no duty paying documents which accompanied the said consignments, the goods were liable for confiscation - the redemption fine imposed by the adjudicating authority in lieu of Sugar and in lieu of 51 lorries is correct and does not require any interference. As regards the penalty imposed under provisions of Section 11AC-the appellant-company had prepared Delivery Challans of the quantities of the Sugar transported on that day - It is also on record that when the stocks were verified in the factory premises, quantity which was indicated in the Delivery challans was only found short and no other shortages or excess were notices - Therefore, he penalty imposed on the appellant-company under Section 11AC of the Central Excise Act, 1994 is set aside. As regards the penalty imposed on the individual under Rule 26 of the Central Excise Rules, 2002 - The said Sugar had been cleared on the Delivery challans for which duty liability needs to be discharged by 5th of next month - It cannot be said that the individual had belief that the goods are liable for confiscation as it is undisputed that the duty liability on the consignments cleared during the months arises only in the subsequent month that also before the 5th. - Penalty imposed on individuals set aside.

Summary

Issues:
1. Appellant's clearance of Sugar without duty paying documents.
2. Seizure of Sugar by Departmental officers.
3. Show-cause notices for demand of duty, confiscation of goods, and penalties.
4. Contesting show-cause notices before the adjudicating authority.
5. Upholding of order-in-original by Commissioner(Appeals).
6. Failure to appreciate submissions by lower authorities.
7. Imposition of penalties under various sections of Central Excise Act and Rules.
8. Discharge of duty liability by the appellant.
9. Confiscation of goods and lorries due to lack of duty paying documents.
10. Redemption fine imposed on the appellant.
11. Penalty imposed on the appellant under Section 11AC.
12. Penalty imposed on the appellant under Rule 25 of the Central Excise Rules.
13. Penalty imposed on an individual under Rule 26 of the Central Excise Rules.

Analysis:
1. The appellant cleared 9010 quintals of Sugar without duty paying documents, leading to interception by Departmental officers. The officers seized the Sugar and issued show-cause notices for duty demand, confiscation, and penalties.
2. The appellant contested the show-cause notices, claiming the clearance was due to practical difficulties and technical lapses in documentation, not malafide intent. The lower authorities upheld the demand and penalties, leading to appeals before the Commissioner(Appeals).
3. The Commissioner(Appeals) rejected the appeals, prompting the appellant to appeal further. The appellant argued against penalties under Section 11AC, stating duty was discharged and discrepancies were due to documentation processes.
4. The Tribunal upheld duty liability on the cleared Sugar but set aside penalties under Section 11AC, noting no intent to evade duty. The redemption fine for confiscation of goods and lorries was upheld due to lack of duty paying documents.
5. The penalty under Rule 25 for failure to record cleared Sugar in the RG-1 Register was upheld, while the penalty on an individual under Rule 26 was set aside, as there was no belief in duty evasion.
6. The Tribunal disposed of both appeals, setting aside penalties under Section 11AC and Rule 26, but upholding penalties under Rule 25. The duty liability on the cleared Sugar was confirmed, and the redemption fine for confiscation was deemed appropriate.