2011 (1) TMI 1017 - AT - Central Excise

Goods cleared without payment of duty - raw material and the finished goods lying in the factory unaccounted were detained under the reasonable belief that the same were to be removed for clandestine removal - demand raised along with penalty - Held that - The appellant have conceded the confiscation of 150 barrels seized from the vehicle. Therefore, there is no infirmity in the adjudicating authority s order insofar as confiscation of these goods are concerned. As regards the good seized from the factory premises on 15/04/2006 valued at ₹ 14,61,498/- is concerned the department could not prove that there was any attempt on the part of the appellant to remove the goods clandestinely. Therefore, the seizure and confiscation of these goods is not sustainable in law. As regards penalty on Shri Haresh Dharmani, Director of the assessee, the department failed to produce any evidence that he was in any way involved in the transportation / removal, etc. in respect of the goods in question - unable to produce any evidence regarding any direct involvement of the Director of the company. Therefore, penalty on the Director is not sustainable in law. So far as penalty under Section 11AC is concerned, no option was given to the appellant at the time of passing of the adjudication order. Therefore, option should be given to the appellant for payment of 25% of penalty in view judgment in the case of K.P. Pouches (P) Ltd. vs. Union of India (2008 (1) TMI 296 - HIGH COURT OF DELHI). Assessee also contended that so far as 178 barrels are concerned they were not given the documents seized by the department which because of which they could not establish before the department that these goods were cleared on payment of duty. Therefore, this aspect requires to be reconsidered - case remanded to the adjudicating authority for deciding the penalty amount and interest in respect of 150 barrels. Redemption fine in respect of these goods should be re-determined considering the value of the goods and the duty amount involved.

Summary

Issues:
- Appeal against Order-in-Appeal upholding adjudication order
- Seizure of goods without payment of Central Excise duty
- Clearance of goods without mandatory permission
- Confiscation of seized goods and imposition of penalty
- Dispute regarding clearance of certain goods
- Penalty on Director of the company
- Reduction of penalty amount
- Evidence of involvement in transportation/removal
- Adjudicating authority's order confirmation
- Confiscation of goods and penalty imposition

Analysis:

The appellant filed an appeal against the Order-in-Appeal upholding the adjudication order regarding the seizure of goods without payment of Central Excise duty. The Central Excise officers intercepted a truck carrying excisable goods and seized them on suspicion of clearance without duty payment. Subsequently, a search at the manufacturer's premises revealed unaccounted raw materials and finished goods. The adjudicating authority confirmed the demand for duty, education cess, interest, penalty, and confiscation of seized goods. The appellant disputed the clearance of certain goods without permission and challenged the confiscation of work-in-progress goods seized from the factory.

Regarding the penalty on the Director of the company, the appellant argued lack of evidence proving his involvement in the transportation or removal of goods. The appellant sought a reduction in the penalty amount based on a Delhi High Court judgment. The JDR supported the adjudicating authority's findings, citing tribunal decisions on management's responsibility for employee actions.

Upon review, the Tribunal upheld the confiscation of goods seized from the vehicle but set aside the confiscation of work-in-progress goods from the factory. The penalty on the Director was revoked due to insufficient evidence of his direct involvement. The Tribunal also directed a reevaluation of the penalty amount and redemption fine for the seized goods, emphasizing the need for documents to establish clearance of certain barrels. The case was remanded for further consideration with a fair hearing opportunity for the appellant.

In conclusion, the appeals were disposed of accordingly, with the Tribunal's order addressing the issues raised by the appellant and providing specific directions for reconsideration and reevaluation by the adjudicating authority.