2015 (12) TMI 661 - AT - Central Excise

Excess stock found during stock taking - Confiscation of goods - Imposition of redemption fine - Penalty under Rule 26 - Held that - Whatsoever method was adopted by the Central Excise officers and as a result variations of stock was found. If the appellant is not satisfied with method of stock taking, they had liberty to dispute method and would have suggested other method of stock taking. However the appellant has not raised any such dispute. Therefore in the facts and circumstances of the case, the excess stock found in the stock verification could not be disputed merely on verbal explanation. The appellant during the seizure of the goods could have represented for re-checking of the stock, which was not opted by the appellant. - excess stock was lying admittedly in the factory and was not cleared from the factory, therefore confirmation of demand and consequential penalty under Section 11AC is not correct. However the goods are very much liable for excise duty. If the same have already been cleared, the said duty shall stand adjusted towards the duty liability of the said goods and if the goods are still lying in the factory as and when the goods is cleared this duty shall be treated as payment of duty on the clearance of the said goods. As regard the penalty, I observed that excise duty at the time of seizure of the goods was not payable, consequently penalty under Section 11AC also wrongly imposed. However since goods were confiscated and I uphold the confiscation, penalty towards confiscation is imposable. - However, redemption fine and penalty is reduced - Decided partly in favour of assessee.

Issues:
1. Confiscation of excess stock of M.S. Ingots during a Central Excise officer's visit.
2. Upholding of demand of excise duty and imposition of penalties.
3. Validity of stock verification process and acceptance of excess stock by the Director.
4. Appellant's failure to appear during the appeal process.
5. Justification of the penalties imposed on the appellant and the Director.

Issue 1: Confiscation of excess stock
The case involved the confiscation of 61 MT of M.S. Ingots found in excess during a stock verification at the appellant's unit. The appellant did not dispute the excess stock during verification, and the Director admitted to the excess stock. The Tribunal noted that the appellant had the opportunity to challenge the stock verification method but failed to do so. Consequently, the excess stock of M.S. Ingots valued at Rs. 10,98,000 was upheld for confiscation.

Issue 2: Demand of excise duty and penalties
The Tribunal found that the excise duty demand of Rs. 1,79,194, which the appellant had already paid, should not have been confirmed as the duty is payable only upon clearance of goods. Since the excess stock was not cleared, confirming the demand and imposing penalties under Section 11AC was deemed incorrect. However, the Tribunal upheld the confiscation of goods and imposed a reduced penalty of Rs. 25,000 instead of Rs. 1,79,194. The redemption fine was also reduced from Rs. 3,30,000 to Rs. 2 lakhs.

Issue 3: Stock verification process and acceptance by Director
The Tribunal considered the appellant's argument that the stock verification method was improper. However, since the appellant did not raise objections during verification and the Director accepted the excess stock, the Tribunal upheld the confiscation. The Tribunal emphasized that the appellant had the opportunity to challenge the method but failed to do so.

Issue 4: Appellant's absence during appeal
Despite the appellant's absence during the appeal hearings, the Tribunal decided to proceed with the case for final disposal in the interest of justice. The appellant's lack of participation indicated a lack of interest in pursuing the appeal, but the Tribunal reviewed the matter based on the appeal memorandum and available records.

Issue 5: Penalties imposed on the appellant and the Director
The Tribunal reduced the penalty imposed on the appellant from Rs. 1,79,194 to Rs. 25,000, considering that excise duty was not payable at the time of seizure. However, a penalty for confiscation was deemed appropriate. Regarding the Director, the Tribunal concluded that penalizing him for improper stock accounting by the appellant's staff was unwarranted, leading to the allowance of the Director's appeal.

In conclusion, the Tribunal upheld the confiscation of goods, reduced penalties, adjusted the duty payment against excess stock clearance, and allowed the Director's appeal based on the issues discussed and analyzed during the proceedings.

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