2008 (7) TMI 384 - AT - Central Excise

Excess quantity of raw materials and finished goods confiscation, fine and penalty - charges were levelled against the Appellants in the show cause notice that the RG-23 A Part-I Register was not properly maintained as all the columns were not filled-in properly and some new columns were added for production of finished goods, dispatch and balance quantity of finished goods held that - the raw materials were received by the assessee after due discharge of duty, therefore, this cannot come under the category of excisable goods - assessee is neither a producer nor registered person or a registered dealer but merely user of raw material, which cannot be called excisable goods in terms of definition contained in Section 2(d) of Central Excise Act, 1944 confiscation of inputs not allowed confiscation for non accounting of finished goods upheld redemption fine and penalty reduced.

Summary

Issues:
Confiscation of raw materials, Confiscation of finished goods, Imposition of penalty and redemption fine, Directors' liability for penalty

Confiscation of Raw Materials:
The case involved the confiscation of raw materials and finished goods from the Appellants' factory by Central Excise Officers. The Adjudicating Authority imposed penalties and fines based on the seizure. The Appellants argued that confiscation was unjustified as they later produced records showing no excess materials. The Tribunal referred to previous decisions and ruled that confiscation of raw materials was not justified, but penalty was deemed appropriate due to non-maintenance of records as per Rule 10(2) of the Central Excise Rules, 2001.

Confiscation of Finished Goods:
Regarding the confiscation of finished goods, the Appellants were found to have not maintained daily stock accounts properly, leading to the confiscation being upheld. The Tribunal cited a previous case to support this decision. The Appellants failed to provide sufficient reasons for the excess finished goods. The Tribunal agreed that the redemption fine and penalty were excessive but upheld the confiscation of finished goods due to inadequate record-keeping.

Imposition of Penalty and Redemption Fine:
The Tribunal reduced the redemption fine and penalty amounts, considering them excessive. The penalty on the Directors was set aside as there was no demand for duty in the case, making the imposition of penalty on the Directors unsustainable. The Tribunal found that the Directors were not liable for penalty in the absence of a duty demand.

In conclusion, the Tribunal set aside the confiscation of raw materials, reduced the redemption fine and penalty amounts, and overturned the penalty imposed on the Directors due to the absence of a duty demand. The judgment highlighted the importance of proper record-keeping in compliance with Central Excise Rules to avoid confiscation and penalties.