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2011 (4) TMI 996 - AT - Central ExcisePenalty imposed is for duty evaded imposed under Section 11AC of the Central Excise Act independent of Rule 25(b) - Once penalty under section 11AC is imposed there is no scope for imposing penalty under Rule 25(b) for the same offence - Since the demand was already paid before the issue of SCN the adjudicating authority should have given the option to pay applicable interest and 25% of the duty evaded penalty imposed on Director under rule 26 of the Central Excise Rules no legal requirement that the penalty should be equal to the duty evaded - After giving concession of paying 25% of duty evaded to the main appellant it is harsh to impose this amount of penalty on the Director of the company. So reduce this penalty to Rs. 70, 000/- Appeals are disposed of
Issues Involved:
1. Confiscation of excess unaccounted inputs and finished goods. 2. Imposition and reduction of penalties. 3. Demand and confirmation of duty and interest. 4. Appeals against the adjudication order. Issue-wise Detailed Analysis: 1. Confiscation of Excess Unaccounted Inputs and Finished Goods: - The Central Excise officers, during a preventive check, discovered a shortage of 2114.93 Kg of printed flexible packing material and an excess of 1438.90 Kgs of printed flexible packing material (pouch form), 2956 Kgs of polyethylene film, and 3666 Kgs of printing ink in the factory premises of Appellant No. 1. These excess goods were seized under the belief that they were intended for clandestine manufacture and removal without payment of duty. - Goods found in the premises of M/s. J.B. Polymers (Appellant No. 3) were also seized as they were not accounted for in their books. - The Assistant Commissioner of Central Excise confiscated the excess unaccounted inputs and finished goods and imposed penalties and redemption fines on the appellants. - The Commissioner (Appeals) set aside the confiscation of excess unaccounted inputs but upheld the confiscation of finished goods seized from Appellant No. 3. 2. Imposition and Reduction of Penalties: - Penalties were imposed on M/s. Prabhat Rotopack Pvt. Ltd. (Appellant No. 1), its Director (Appellant No. 2), and M/s. J.B. Polymers (Appellant No. 3) under various sections and rules of the Central Excise Act and Rules. - The Commissioner (Appeals) reduced the penalty on Appellant No. 1 under Rule 25 of the Cenvat Credit Rules to Rs. 50,000/- but upheld other penalties. - The Tribunal further modified the penalties, reducing the redemption fine on raw materials to Rs. 1,50,000/- and the penalty under Rule 25 to Rs. 75,000/-. - The penalty on the Director (Appellant No. 2) was reduced to Rs. 70,000/- considering the concession given to the main appellant. - The penalty on M/s. J.B. Polymers was set aside as it was not based on sustainable charges. 3. Demand and Confirmation of Duty and Interest: - The demand of duty amounting to Rs. 3,33,319/- on goods clandestinely removed in the past was confirmed, and the duty already paid was appropriated. - The Tribunal upheld the demand of duty and interest payable by Appellant No. 1. - The Tribunal provided an option to pay applicable interest and 25% of the duty evaded as penalty within 30 days, following the decision of the Delhi High Court in K.P. Pouches (P) Ltd. v. UOI. 4. Appeals Against the Adjudication Order: - Appellant No. 1 appealed for a reduction of the penalty to 25% of the duty involved and leniency in the redemption fine. - Appellant No. 2 argued against the penalty imposed on him, citing the lack of specific allegations and findings in the Show Cause Notice. - Appellant No. 3 contended that the penalty imposed on them was unjustified as the goods belonged to Appellant No. 1 and excise duty was paid on them. - The Department appealed against the setting aside of the confiscation of excess raw materials and the reduction of penalties and redemption fines. Judgment: - The Tribunal upheld the confiscation of raw materials worth Rs. 8,70,621/- but reduced the redemption fine to Rs. 1,50,000/- and the penalty under Rule 25 to Rs. 75,000/-. - The confiscation of finished goods seized from the premises of J.B. Polymers was confirmed, but the redemption fine was reduced to Rs. 38,000/-. - The demand of duty amounting to Rs. 3,33,319/- was confirmed, with an option to pay applicable interest and 25% of the duty evaded as penalty within 30 days. - The penalty on the Director was reduced to Rs. 70,000/-. - The penalty on M/s. J.B. Polymers was set aside. - The appeals filed by the three appellants and the department were disposed of with the above modifications. Pronouncement: - The judgment was pronounced in open court on 27-4-2011.
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