2007 (12) TMI 94 - AT - Central Excise

Compounded levy scheme 50% duty not paid by 15th of the month - serious allegations of breaking departmental seal stand admitted by the appellant, which reflect upon their mala fide - goods seized were liable to confiscation - redemption fine and penalty are reduced inasmuch as 50% of the dues even for the month of the December, were required to be deposited at the end of the month director aware of braking of seal, personal penalty imposable

Summary

Issues:
1. Imposition of penalty and confiscation of goods under compounded levy scheme.
2. Interpretation of Rule 96ZQ regarding penalty for non-payment of duty by the due date.

Analysis:
1. The case involved M/s. Bindal Silk Mills Pvt. Ltd., engaged in manufacturing processed manmade fabrics under the Compounded levy scheme. During a visit, it was discovered that two stenter machines, sealed by Central Excise officers, were being used without authorization. Consequently, an offence case was registered, and processed fabrics were seized. The Commissioner ordered confiscation of goods with a fine option of Rs.1 lakh, along with imposing penalties on the company and its Director, which were upheld by the Commissioner (Appeals), leading to the current appeal.

2. The appellant did not contest the duty demand but sought a reduction in the penalty based on Rule 96ZQ(5). The appellant's representative argued for a penalty reduction, citing a previous Tribunal case. The Rule mandates payment of 50% of duty by the 15th of the month and the remaining by month-end. Failure to comply attracts a penalty equal to the outstanding duty or Rs. 5,000, whichever is greater. The Tribunal clarified that the penalty is linked to non-payment by the due date and should be imposed at the end of the month, not immediately after the 15th.

3. In the current case, the appellant failed to pay 50% of the duty by the 15th of December 2000 but paid it by month-end. The Tribunal noted the serious offense of breaking departmental seals and the appellant's history as a habitual offender. Consequently, the goods were deemed liable for confiscation. However, the redemption fine was reduced to Rs.40,000, and penalties were decreased to Rs.3.10 lakhs for the company and Rs.40,000 for the Director. The penalties were adjusted due to the requirement to deposit dues by the month-end and the Director's involvement in breaking the seal.

In conclusion, the Tribunal upheld the confiscation of goods but modified the redemption fine and penalties, reducing them based on the payment timeline and the Director's involvement. The appeal was rejected except for the adjustments made in the penalties and redemption fine.