2016 (1) TMI 840 - AT - Central Excise

Redemption fine along with penalties - clandestine removal - non-duty paid stock - Held that - As out of total seized goods of ₹ 73,28,787/-, the learned Commissioner (Appeals) held that goods amounting to ₹ 18,27,926/- is liable for confiscation on the ground that M/s. Metro was not able to show the invoices for the same. The appellant has contended that they are receiving wire and cables of spools and selling the wire and cables after cutting the size according to the requirements of various customers. For selling the wires and cables on spools in length, there is difference in length which is a trade practice and difference in stock works out to 2% of the total purchases made by M/s. Metro. This contention has not been controverted by the Revenue with cogent reasons. Moreover, the Revenue has also failed to come to a concrete conclusion that if the goods have not been transferred from M/s. Pymen Cables as the charge of clandestine removal against M/s. Pymen Cable has been set aside, then from where, Metro procured such wire and cables. In these circumstances, the contention of M/s. Metro is acceptable that there is marginal difference of 2% of stock in excess is due to excess length of wire and cables on spool being a trade practice. As they are receiving wire and cable of spools and on having spools on wires and cables on extra length. In these circumstances, the excess stock of ₹ 18,27,926/- is not liable for confiscation. Consequently, the redemption fine on M/s. Metro is set aside. As the charge against M/s. Metro has been set aside and no penalty has been imposed on M/s. Metro by the authorities below, in these circumstances, the penalty on Shri Sandeep Garg director of M/s. Metro is also not imposable under Rule 26 of Central Excise Rules, 2002. Therefore, the penalty imposed on Shri Sandeep Garg is also set aside. - Decided in favour of assessee.

Summary

Issues:
Appeal against redemption fine and penalties imposed on individuals by impugned order.

Analysis:
1. The appellants challenged the order imposing a redemption fine and penalties on individuals after officers recovered excess wires and cables from factory premises and godown. The appellants contended that M/s. Metro Electricals Pvt. Ltd., a trading company, was not required to maintain records under Central Excise Act/Rules as it was not registered with the Central Excise department. They argued that the charge of clandestine removal by M/s. Pymen Cables was based on assumptions without tangible evidence. The appellants provided records of purchase from various suppliers to refute the allegations. The Commissioner (Appeals) held goods worth a certain amount liable for confiscation and imposed fines on individuals, which the appellants disputed.

2. The appellants further argued that the penalty on Shri Sandeep Garg, a director of M/s. Metro, was unjustified as M/s. Metro had not been penalized. They contended that the penalty on Shri Vinod Garg, the proprietor of M/s. Pymen Cables India, was also not legally sanctioned as the charge of clandestine removal against M/s. Pymen Cables was based on presumption and surmises. The appellants emphasized that M/s. Pymen Cables and Shri Vinod Garg were essentially the same entity, making the penalties invalid.

3. The Tribunal noted that the show cause notice was issued on the premise of clandestine removal of goods by M/s. Pymen Cables without duty payment to M/s. Metro. However, the Commissioner (Appeals) found the charge of clandestine removal against M/s. Pymen Cables to be based on presumption and surmises, leading to the conclusion that penalties on individuals associated with M/s. Pymen Cables were not justified. The Tribunal also considered the discrepancy in seized goods and the appellants' explanation regarding the trade practice of selling wires and cables after cutting them to customer requirements, leading to a marginal excess in stock. The Tribunal accepted the appellants' explanation and set aside the redemption fine imposed on M/s. Metro.

4. As the charge against M/s. Metro was dismissed and no penalties were imposed on the company, the penalties on individuals associated with M/s. Metro were also deemed unjustifiable. Therefore, the Tribunal set aside the penalties imposed on Shri Sandeep Garg and Shri Vinod Garg. The impugned order was overturned, and the appeals were allowed with consequential relief, emphasizing the lack of evidence supporting the allegations of duty evasion and clandestine removal.