2022 (1) TMI 562 - AT - Central Excise

Clandestine removal - M.S. Ingot - Confiscation of excess found stock - quantum of redemption fine and penalty - HELD THAT - The excess stock found during the physical stock taking for which a panchnama was drawn in the presence of authorised signatory Shri D K Shrivastava. No objection was raised at the time of drawing the panchnama by Shri D K Shrivastava however, in the panchnama he submitted that the excess stock accumulated over a period of time therefore, in my view, there is no dispute about the excess stock found. However, no mala fide intention can be attributed to the appellant such has any attempt to clear the goods clandestinely but in terms of Rule 10 of Central Excise Rules, 2002 it is the bounden duty of the assessee to record stock of finished goods. In the present case, it is admitted fact that the excess stock was not accounted for by the appellant therefore, the goods are liable for confiscation. However, since there is no attempt to clear the goods clandestinely and the offence at the most is only of non accounting of finished goods, I am of the view that the lenient view can be taken. The redemption fine of ₹ 2 Lacs is reduced to ₹ 1 Lacs. However, the penalty imposed on the appellant factory i.e. ₹ 10,000/- is reasonable hence the same is upheld - appeal allowed in part.

Summary

Issues:
1. Confiscation of excess stock of M.S. Ingot
2. Consequential redemption fine
3. Reduction of penalties on the factory and the authorized signatory

Confiscation of Excess Stock of M.S. Ingot:
The case involved a physical stock taking at the factory where an excess stock of 34.16 M.T of M.S. Ingot was found. A panchnama was conducted in the presence of the Authorized Signatory. The adjudicating authority proposed confiscation of the excess stock and penalties. The Commissioner (Appeals) upheld the confiscation and redemption fine, leading to the appeal. The judge noted that no objection was raised during the panchnama by the signatory. Although there was no mala fide intention, the appellant failed to account for the excess stock, making the goods liable for confiscation. However, considering the non-clandestine nature of the offense, a lenient view was taken.

Consequential Redemption Fine:
The redemption fine of ?2 Lacs was reduced to ?1 Lacs, reflecting a partial reduction. The penalty of ?10,000 on the factory was deemed reasonable and upheld. The judge emphasized that since there was no mala fide intention or attempt to clear excess stock clandestinely, the penalty on the authorized signatory was set aside.

Reduction of Penalties on the Factory and the Authorized Signatory:
The penalties were reduced from ?35,000 to ?10,000 on the factory and from ?50,000 to ?20,000 on the authorized signatory. The judge's decision was based on the absence of mala fide intent and the non-clandestine nature of the offense. The appeal of the factory was partly allowed, while the appeal of the authorized signatory was fully allowed.

In summary, the judgment upheld the confiscation of excess stock of M.S. Ingot, reduced the redemption fine, and set aside the penalty on the authorized signatory due to the absence of mala fide intention. The penalties on both the factory and the signatory were reduced based on the non-clandestine nature of the offense.