2007 (2) TMI 126 - AT - Central Excise

Penalty and redemption fine - Alleged that appellant had indulge in the confiscation of good and liable to pay redemption fine and penalty and appellant demand for reduction of redemption fine and penalty - After considering the fact redemption fine and penalty reduced

Summary

Issues:
- Appeal against impugned order passed by the Commissioner (Appeals)
- Confiscation of excess goods found in the factory and truck
- Denial of Modvat credit on inputs found short
- Imposition of redemption fine and penalty
- Contention regarding reduction in redemption fine and penalty
- Mentioning of sub-clause of Rule 173Q in penalty imposition

Analysis:
The appellants filed an appeal against the impugned order passed by the Commissioner (Appeals) regarding the confiscation of excess goods found in the factory and truck, and the denial of Modvat credit on inputs found short. The officers found Chenile yarn in excess in the truck, which was dutiable, leading to a show cause notice for confiscation and denial of Modvat credit. The adjudicating authority confiscated the goods and imposed fines for redemption and penalty under Rule 173Q and Section 11AC of the Act.

On appeal, the Commissioner (Appeals) held that the appellants are entitled to credit for goods found short on an actual basis. The main contention in the present appeal was the reduction in the redemption fine and penalty. The appellants argued that the redemption fine of Rs. 5 lakhs was harsh, claiming that the excess goods in the factory were waste yarn, not Chenile yarn, but no finding was given by the authority. They also disputed the penalty imposition under Rule 173Q, citing a Supreme Court decision.

The revenue contended that the Managing Director did not explain the excess goods as waste yarn during the verification, suggesting it was an afterthought. They argued that the penalty under Rule 173Q was justified as the sub-clause was implied in the show cause notice. The Tribunal reduced the redemption fine to Rs. 3,50,000 considering the duty involved and reduced the penalty to Rs. 1,50,000 after considering the facts and circumstances. The decision cited the Supreme Court's ruling on mentioning the sub-clause under Rule 173Q for penalty imposition, but found it not applicable in this case due to the awareness of the appellants regarding liability for penalty.

In conclusion, the Tribunal upheld the impugned order, except for the reduction in redemption fine and penalty. The appeal was disposed of accordingly, with the order dictated and pronounced in the open court.