2011 (5) TMI 602 - AT - Central Excise

Katha production - duty demand and redemption fine as well as penalty - Held that In the event if it is concluded that there shall be levy, the appellant should not be asked to pay unreasonable redemption fine of Rs.1 lakh when the value of goods is only Rs.3,81,000/- and also duty liable was of Rs.60,960/-. In the absence of any material or any surrounding circumstances speaking against assessee the redemption fine is reduced to Rs.20,000/- and the penalty to be reduced to Rs.10,000/- - partly in favour of assessee.

Summary

Issues:
Classification of goods under entry No.3201 of CETA, 1985 and imposition of duty, redemption fine, and penalty.

Detailed Analysis:

1. The appellant contended that the goods Katha produced by them are not dutiable under entry No.3201 of CETA, 1985. They argued that no duty should be levied on such goods, and the adjudication order imposing duty, redemption fine, and penalty was unjustified.

2. The director of the company, who faced a penalty of Rs.10,000, did not file any appeal, which was noted by the tribunal.

3. The appellant's consultant argued that since Katha was not dutiable in September 2003 as per entry No.3201 of CETA, there should be no duty imposed. They highlighted that the classification of Katha under the said entry was not specified.

4. The revenue contended that the goods manufactured by the appellant were rightly classifiable under entry No.3201 of CETA during the material period, and this classification was undisputed. Therefore, the levy of duty was automatic, as per the entry in CETA, and the appellant failed to prove that the goods were not marketable.

5. After hearing both sides and examining the records, the tribunal reviewed the tariff entries for the relevant period. They found that the revenue's classification for the goods manufactured was unchallenged, leading to the confirmation of duty liability under the Central Excise Act, 1944.

6. The appellant's consultant requested that if duty was to be levied, the redemption fine of Rs.1 lakh should be considered unreasonable, given the value of goods and duty liability. They also sought a waiver of the penalty.

7. The tribunal observed that there was no evidence to suggest that the appellant had unduly benefited from the nature of the goods to warrant a redemption fine of Rs.1 lakh. In the absence of any material against the appellant, the tribunal reduced the redemption fine to Rs.20,000 and the penalty to Rs.10,000 due to the classification dispute.

8. In conclusion, the tribunal granted partial relief to the appellant by reducing the redemption fine and penalty, thereby allowing the appeal partly based on the classification dispute and surrounding circumstances.