2016 (7) TMI 1172 - AT - Central Excise

Redemption fine and penalty imposed - clandestine removal of goods - non recording of shortage in their statures records - Held that - In this case, upto 22.12.2010, the stock as per books was 366.184 MT but the goods found short of 124.302 MT having the value of ₹ 40,64,675/- which are to be included in the value of the clearance. If the same is done, the clearance of the appellant exceeded the threshold limit of ₹ 1.5 crore as per Notification No. 8/03-CE dated 1.3.2003. Therefore, the appellant was required to be registered on the said date and the appellant has not applied for registration, therefore, I do not any infirmity in the allegation against the appellant made by the Revenue that the goods weighing 211.882 MT in physical stock are meant for clandestine removal. In the circumstances, thus hold that the goods found in physical stock are liable for confiscation. In that circumstance, the redemption fine and penalty imposed on the appellant are highly excessive, therefore, the redemption is reduced to ₹ 1 lakh (one lakh) and penalty to ₹ 50,000/- (fifty thousand).

Summary

Issues:
Impugned order imposing redemption fine and penalty on the appellant for shortage of finished goods and alleged clandestine removal.

Analysis:
The case involves the appellant, a manufacturer of various goods, who availed duty exemption under Notification No. 8/03-CE dated 1.3.2003. During a visit by the Central Excise division's staff, a significant shortage of finished goods was found in physical stock compared to the records. This shortage led to the suspicion of clandestine removal, as the value of the missing goods pushed the total clearances beyond the exemption threshold of ?1.5 crore. Consequently, the seized goods were allowed to be redeemed upon payment of a fine and penalty. The appellant challenged the imposition of redemption fine and penalty.

The appellant argued that the clearances were below the threshold limit until a certain date, denying the allegation of clandestine removal. The appellant contended that the shortage did not warrant confiscation of goods or imposition of fines and penalties. However, the Revenue opposed this, emphasizing that the missing goods' value must be considered in the total clearances, which would exceed the exemption limit. Additionally, as the appellant was not registered at the time of the visit, the goods in physical stock were deemed liable for confiscation.

The Tribunal found that the shortage of goods, when included in the clearances, surpassed the exemption limit, necessitating the appellant's registration. As the appellant failed to register and the goods were suspected to be for clandestine removal, they were held liable for confiscation. However, the Tribunal deemed the originally imposed redemption fine and penalty excessive, reducing them significantly to ?1 lakh and ?50,000, respectively. Consequently, the appeal was disposed of with the revised penalties.