2007 (11) TMI 144 - AT - Central Excise

Excise officers intercepted a truck loaded with 205 thans of man made fabrics in transit - removed the goods without the cover of invoice clandestine removal duty deposited before issue of SCN Penalty equal to amount of duty not justified so penalty u/s 11AC reduced to 25% of amount of duty - deposited the duty before issue of show cause notice and the quantum of fine is more than the duty amount so redemption fine is reduced from 40,000 to.20,000

Summary

Issues:
1. Clandestine removal of goods without payment of duty intercepted by Central Excise Officers.
2. Imposition of penalty under Section 11AC of the Central Excise Act.
3. Relevant case laws cited by the appellant.
4. Discretionary power for imposition of penalty under Section 11AC.
5. Reduction of redemption fine and penalty amount.

Issue 1: Clandestine removal of goods without payment of duty intercepted by Central Excise Officers.

The case involved the appellants being engaged in the manufacture of man-made fabrics, where a truck loaded with 205 thans of fabrics was intercepted in transit without duty paying documents. The goods were removed without payment of duty, leading to the seizure by Central Excise Officers. The appellant later deposited the duty, but the adjudicating authority confiscated the goods, imposed a redemption fine, and confirmed the duty demand.

Issue 2: Imposition of penalty under Section 11AC of the Central Excise Act.

The appellant argued that the duty was paid before the show cause notice, hence penalty under Section 11AC should not apply. The Revenue contended that the charge of clandestine removal was admitted, citing relevant judgments. The Tribunal found that the removal of goods without payment of duty was established, rejecting the appellant's argument regarding duty payment before the notice.

Issue 3: Relevant case laws cited by the appellant.

The appellant cited various case laws to support their arguments, including Union of India v. T.P.L. Industries Ltd., Commissioner of Central Excise v. Sigma Steel Tubes, CCE, Bangalore-III v. Chelpark Co. (P) Ltd., and Union of India v. M/s. Pack Point. However, the Tribunal found these cases inapplicable to the present situation as they did not involve clandestine removal of goods.

Issue 4: Discretionary power for imposition of penalty under Section 11AC.

The appellant argued that the imposition of penalty under Section 11AC is discretionary, citing Commissioner of Central Excise, Indore v. Sai Machine Tools Ltd. The Tribunal considered the decision of the Hon'ble Bombay High Court and the Larger Bench's view on the matter, ultimately reducing the penalty amount based on the appellant's deposit of duty before the notice.

Issue 5: Reduction of redemption fine and penalty amount.

Considering the appellant's deposit of duty before the notice and relevant case law interpretations, the Tribunal reduced the penalty to 25% of the duty amount. The redemption fine was also reduced as it exceeded the duty amount, aligning with the decision of the Hon'ble High Court of Rajasthan. The appeal was disposed of with the revised penalty and redemption fine amounts.

This detailed analysis covers the issues of clandestine removal, penalty imposition, relevant case laws, discretionary power for penalties, and the reduction of redemption fine and penalty amounts in the legal judgment delivered by the Appellate Tribunal CESTAT, New Delhi in 2007.