2015 (4) TMI 452 - AT - Central Excise

Confication of goods - Imposition of redemption fine and penalty - detection of excess stock of branded chewing tobacco - Incomplete books of accounts - Held that - When the accounts were not updated and excess quantity of goods were found during inventory, preponderance of probability was in favour of Revenue to hold possible circumstance of clandestine removal. In absence of any reconciliation statement of the excess goods found, it was not open to the appellant to challenge that mere absence of the partner or the staff shall not bring the appellant to the ambit of adjudication. Therefore, excess branded chewing tobacco found by investigation can be inferred to be unaccounted stock with the object of removal thereof without payment of duty. Appellant s only plea all along was that mere unaccountal of the stock found does not make the appellant liable to duty or penal consequence. Adjudicating authority had every reason to believe that the appellant s goods were liable to confiscation and redeemable on payment of redemption fine. Therefore, both seizure and imposition of redemption fine is confirmed. Present case being the case of tobacco product which has higher margin in the market, there shall be no interference to the adjudicated fine since the appellant did not come out to show the extent of margin earned in dealing with Tobacco products. Therefore, there is no necessity to intervene to the decision of learned adjudicating authority. - When there was prejudice caused to Revenue, there cannot be exoneration from penalty which otherwise shall be sanction to illegality. Therefore, there shall be no interference to the penalty imposed also. - Decided against assessee.

Summary

Issues: Detection of excess stock of branded chewing tobacco, Challenge to the authority of the investigating officer as adjudicating authority, Imposition of redemption fine, Discretion in releasing goods on payment of redemption fine, Imposition of penalty.

In the present case, the issue revolved around the detection of excess stock of branded chewing tobacco during an investigation, which the appellant failed to reconcile due to the absence of the concerned partner and staff. The investigating authority found the excess stock to be unaccounted for, leading to a possible circumstance of clandestine removal. The appellant's argument that the investigating officer should not act as the adjudicating authority was dismissed as there was no legal prohibition against it. The adjudicating authority confirmed the seizure and imposition of redemption fine based on the unaccounted excess goods found, deeming them liable for confiscation.

Regarding the imposition of the redemption fine, the appellant cited a precedent from the Bangalore Bench of the Tribunal suggesting a fixed percentage for redemption fine. However, the Tribunal emphasized that redemption fines cannot be mechanically imposed based on a formula and must consider the profit expected from dealing in confiscable goods. Citing legal precedents, the Tribunal highlighted that each case's redemption fine should be determined based on the specific facts and circumstances, without applying a standard formula. The amount of redemption fine imposed by the adjudicating authority was upheld.

In analyzing the discretion to release goods on payment of redemption fine, the Tribunal referred to a judgment by the High Court of Delhi emphasizing that such discretion must be exercised justly and fairly, with cogent and relevant reasons. Given the higher profit margin associated with tobacco products, the Tribunal concluded that there was no need to intervene in the adjudicated fine, especially since the appellant failed to demonstrate the extent of margin earned from dealing with tobacco products.

Regarding the penalty imposed due to prejudice caused to revenue, the Tribunal held that there could be no exoneration from penalty when illegality was established. Consequently, the penalty imposed was upheld, and the appeal along with the stay application was dismissed, affirming the decisions made by the adjudicating authority.