2008 (10) TMI 184 - AT - Central Excise

Confiscation of non-accounted excess stock found in the premises - quantity of finished goods not accounted for at the time of visit by the officers is quite substantial - About 190 MTs. of waste paper was found to be over and above the stock of waste papers recorded in their accounts, which according to the learned Advocate constitute only 2.7% of the total stock of waste papers. - The obligation to account for the raw materials and manufactured goods is a strict one. This is a preventive measure. Non-accountal of substantial quantity of finished goods and raw materials are admitted. The explanation offered for such excess stock found is not convincing though there are mitigating circumstances. They failed to maintain proper account and Rule 10A of Central Excise Rules, 2002 is attracted. Confiscation upheld but redemption find the penalty reduced.

Summary

Issues:
1. Confiscation of excess stock and imposition of penalties.
2. Justification for confiscation and penalty.
3. Arguments regarding strict liability and mens rea.
4. Mitigating circumstances and reduction of fines and penalties.

Analysis:
1. The appeal was against the order of the Commissioner (Appeals) regarding the confiscation of excess stock and imposition of fines. The appellant's premises were visited, revealing excess stock and shortages, leading to confiscation and penalties. The original authority's decision was upheld by the Commissioner (Appeals).

2. The appellant argued that the excess stock was due to operational reasons, such as employees being on leave, and there was no intention to remove goods clandestinely. The appellant sought to set aside the confiscation and penalty, citing a previous case in support of their plea. The respondent, however, emphasized the strict liability to account for goods, regardless of intent, and referenced various decisions to support their argument.

3. The Tribunal considered the submissions of both sides and noted the substantial quantity of unaccounted finished goods and raw materials. Despite mitigating circumstances, the explanation provided for the excess stock was deemed unconvincing. The Tribunal held that the obligation to account for goods is strict and preventive, attracting Rule 10A of the Central Excise Rules, 2002. Consequently, the Tribunal found the confiscation warranted.

4. In light of the case's circumstances, the Tribunal upheld the confiscation but reduced the redemption fine from Rs. 1,60,000 to Rs. 75,000 and the penalty from Rs. 50,000 to Rs. 2,000. The decision was based on a careful consideration of facts and circumstances, balancing the severity of the offense with the mitigating factors presented during the proceedings.