2014 (10) TMI 56 - AT - Central Excise

SSI Exemption - Non maintenance of Records - Confiscation of goods - Redemption fine and penalty imposed - Held that - At the time of visit of the officers of the factory, the appellants were availing the SSI exemption and were fully exempted from duty and at that time, the value of their clearances during the financial year was ₹ 45,81,260/-. There is also no dispute at that time of officers visit, the appellants on the basis of value of their clearances upto that date, were neither required to file a declaration with Central Excise department nor were required to obtain Central Excise registration. The only allegation against the appellant is that they were not maintaining any records. Learned Counsel for the appellant herself has conseded even though at the time of officer visit to the factory, they were not required to file any declaration or obtain Central Excise registration, they should have maintained some records of the goods manufactured and cleared by them. However, there is neither allegation against the appellant that they were under reporting the production and clearances nor there in any allegation that the clearances of the appellant s unit were required to be clubbed with the clearances of some other unit and on that basis, they are not eligible for SSI exemption. Merely for non-maintenance of records, the redemption fine of ₹ 2 lakhs and penalty equal to the duty involved on the seized goods is too high. Fine and penalty reduced to ₹ 50,000/- - Decided partly in favour of assessee.

Summary

Issues: Confiscation of seized goods, quantum of redemption fine, quantum of penalty imposed.

Confiscation of Seized Goods: The appellant's factory was visited by Central Excise officers who found finished goods worth a certain amount. The goods were seized under Rule 25(1) of Central Excise Rules on the belief that they were unaccounted for. The Assistant Commissioner ordered confiscation with an option to redeem on payment of a fine and imposed a penalty. Both the appellant and the department appealed. The Commissioner (Appeals) dismissed the appellant's appeal but allowed the department's appeal, enhancing the penalty. The appellant challenged the confiscation and the quantum of redemption fine.

Quantum of Redemption Fine: The appellant, an SSI unit, argued that they were within exemption limits and not required to file declarations or obtain Central Excise registration. They contended that the redemption fine and penalty imposed were too harsh, considering they were only required to maintain private records, not statutory ones. The appellant sought a reduction in the redemption fine and penalty.

Analysis: The Tribunal noted that the appellant was availing SSI exemption and had not crossed the threshold limits for filing declarations or obtaining Central Excise registration. While the appellant should have maintained some records, there was no evidence of underreporting or ineligibility for SSI exemption. The Tribunal found the redemption fine and penalty excessive for mere non-maintenance of records. Consequently, the redemption fine was reduced to Rs. 50,000, and the penalty was reduced to Rs. 10,000. The impugned order was modified accordingly, recognizing the appellant's compliance with exemption limits despite the lapse in record-keeping.