2008 (4) TMI 262 - AT - Central Excise

Shortage and excess of finished goods of different description, in packed and loose conditions - irregularity on the part of the Respondent is clearly indicated - Admittedly, the excess quantity of 32.771 M.T. of Ferro Alloys was unaccounted and the same were seized from the Respondent s premises and no proper explanation was given and, therefore, confiscation is justified - impugned order is modified in so far as confiscation is upheld and the redemption fine is reduced

Summary

Issues:
- Demand of duty, confiscation of goods, and penalty reduction.

Analysis:
1. The appeal was filed by the Revenue against the order of the Commissioner (Appeals) regarding the demand of duty, confiscation of goods, and penalty reduction. The Respondents were involved in the manufacture of Ferro Alloys. Central Excise officers found discrepancies in the stock of finished goods during a visit to the factory. The Adjudicating Authority confirmed the demand of duty, imposed penalties, and confiscated goods. However, the Commissioner (Appeals) set aside the demand of duty, confiscation of goods, and reduced the penalty to Rs. 10,000 under Rule 226 of the Central Excise Rules, 1944.

2. The Revenue contended that the adjustment of excess and shortage of goods was not permissible as accepted by the Respondent. They argued that the excess materials were liable for confiscation. The Respondent, through their Advocate, reiterated the findings of the Commissioner (Appeals) and relied on various Tribunal decisions to support their case.

3. The Respondent provided a detailed chart showing the stock position and the adjustment of excess and shortage materials in their reply to the show cause notice. The Tribunal analyzed the chart and found that the adjustment of packed/loose materials done by the Commissioner (Appeals) was correct. The Tribunal also considered the statement made by the Works Manager regarding contaminated goods and concluded that the confiscation of contaminated materials was not justified.

4. The Tribunal further examined the excess stock of Ferro Alloys found in the factory, which was not adequately explained by the Respondent. Despite the lack of proper explanation for the excess quantity, the Adjudicating Authority had failed to substantiate the charge of clandestine removal with corroborative evidence. The Tribunal disagreed with the Commissioner (Appeals) and upheld the confiscation of the excess Ferro Alloys.

5. Ultimately, the Tribunal modified the impugned order, upholding the confiscation of the excess Ferro Alloys and reducing the redemption fine. The appeal was disposed of with the specified modifications.

This detailed analysis covers the issues of demand of duty, confiscation of goods, and penalty reduction as addressed in the legal judgment by the Appellate Tribunal CESTAT, New Delhi.