2011 (6) TMI 556 - AT - Central Excise

Confiscation and redemption fine process the fabrics with or without the aid of power or steam - Held that - Considering the fact that the appellants have already paid the duty interest and equivalent amount of penalty - redemption fine is excessively high. - redemption fine reduced to Rs. 10, 000/- from 2, 50, 000/-.

Summary

Issues:
1. Duty demand, interest, penalty, and redemption fine imposed on the appellant.
2. Contesting the redemption fine.
3. Applicability of exemption under Notification 5/1999 dated 28/02/1999.
4. Contravention of Central Excise Act and Rules.
5. Imposition of redemption fine after payment of duty.
6. Reduction of redemption fine.

Analysis:
The appellants appealed against an order confirming duty demand, interest, penalty under Section 11AC, and a redemption fine. The appellants contested only the redemption fine, having admitted and paid the duty demand and penalty. They claimed exemption from Central Excise duty under Notification 5/1999 for processing cotton fabrics without power or steam. The appellants had surrendered their Central Excise registration before the introduction of Rule 96ZQ and informed authorities of their intent to process fabrics without power or steam. However, during a search, it was discovered that a 'mercerising machine' was running with an electric power-driven motor, leading to the seizure of processed fabrics and imposition of duty, interest, penalty, and a redemption fine.

The Tribunal noted that the appellants were indeed processing fabrics with a power-driven motor, making them liable for confiscation of goods. Despite having paid duty, interest, and penalty, the Tribunal found the redemption fine excessive. Consequently, the redemption fine was reduced to Rs. 10,000 from Rs. 2,50,000. The appeal was disposed of accordingly.

This judgment highlights the importance of compliance with exemption conditions and the consequences of contravening excise regulations. It also illustrates the Tribunal's discretion in adjusting fines based on the circumstances of the case, even after payment of other dues.