2015 (5) TMI 698 - AT - Central Excise

Penalty u/s 11AC - Clandestine removal of goods - Held that - Penalty under section 11AC of the Act is not imposable as in this case as duty demand has already been dropped by the learned Commissioner (Appeals). Further, I find that currency seized is the amount withdrawn from the bank which is not the sale proceed of the goods. Nobody will keep the amount recovered from the clandestinely removed goods in bank, therefore amount seized was not the sale proceeds of the goods which have been cleared clandestinely. In these circumstances, seizure of Indian currency is not correct. Consequently the same cannot be confiscated. In these circumstances, the confiscation of the Indian currency is set aside. Further, I find that for the goods seized at their business premises valued at ₹ 20,27,870/-, the redemption fine was imposed of only ₹ 25,000/- whereas the goods valued at ₹ 91,58,842/-, the redemption fine imposed is ₹ 300,000/- which is highly excessive - Decided partly in favour of assessee.

Summary

Issues:
1. Imposition of penalty under section 11AC without duty demand.
2. Confiscation of currency seized during investigation.
3. Excessive redemption fines and penalties imposed on the appellants.
4. Reduction of redemption fines and penalties.

Analysis:
1. The appellant contested the penalty under section 11AC, arguing that as there was no duty demand against them, the penalty should not apply. The learned Commissioner (Appeals) dropped the duty demand, leading to the conclusion that the penalty under section 11AC was not applicable. The appellate tribunal concurred with this finding.

2. The issue of confiscation of the currency seized during the investigation was raised. The Revenue contended that the seized currency was the sale proceeds of goods cleared clandestinely. However, the tribunal found that the currency seized was not the sale proceeds of the goods, as it was withdrawn from the bank and not directly related to the clandestine activities. Therefore, the tribunal set aside the confiscation of the Indian currency.

3. Concerning the redemption fines and penalties imposed on the appellants, the tribunal noted that the amounts were deemed excessive. The tribunal reduced the redemption fine for goods seized at the business premises from Rs. 300,000 to Rs. 100,000, considering the value of the goods. Additionally, the penalties imposed on the appellants were deemed highly excessive, prompting the tribunal to revise and reduce the penalties significantly.

4. The tribunal, after considering the arguments from both parties, made the following adjustments to the penalties imposed:
- Goyal Auto Products manufacturing unit: Nil penalty.
- Goyal Auto Products, Trading Unit, Karol Bagh: Penalty reduced to Rs. 25,000.
- Shri Rahul Goyal and Shri Raghubar Dayal Goyal: Penalties reduced to Rs. 1,00,000 each.
With these modifications, the appeals were disposed of, providing relief to the appellants in terms of reduced fines and penalties.