2008 (7) TMI 438 - HC - Central Excise

Summary

Issues:
1. Confiscation of seized goods and imposition of redemption fine
2. Penalty imposed on the respondent for non-accounting of goods in RG-I Register
3. Proof of intent to evade payment of duty and penalty imposed under Rule 173Q(1) of Central Excise Rules, 1944

Confiscation of Seized Goods and Imposition of Redemption Fine:
The case involved a situation where officers of the Central Excise Department found a shortage of stock compared to the RG-I Register and excess stock on the premises during a visit to the respondent assessee's premises. The respondent provided explanations for the discrepancies, attributing the shortage to explainable reasons and the excess stock to the absence of the Project Manager who was responsible for maintaining the RG-I Register. The Commissioner (Appeals) accepted the explanations provided by the respondent and did not find any reason to order confiscation under Rule 173Q(1). Instead, a penalty of Rs. 2000 was imposed for non-entry in the RG-I Register, the maximum prescribed penalty for such a violation. The Tribunal confirmed these findings, concluding that no duty could be confirmed on the shortages, and hence, no mandatory penalty under Section 11AC was warranted. The Tribunal also did not find any reason to impose a penalty on the Project Manager. Ultimately, the High Court upheld the orders of the Commissioner (Appeals) and the Tribunal, dismissing the appeal.

Penalty Imposed for Non-Accounting of Goods in RG-I Register:
The appellant challenged the reduction of the penalty imposed on the respondent under Rule 173Q(1) of the Central Excise Rules, 1944 for non-accounting of goods in the RG-I Register. The Commissioner (Appeals) reduced the penalty to Rs. 2000, considering the explanations provided by the respondent for the discrepancies in stock. The Commissioner (Appeals) found that there was no evidence of clandestine removal or intent to evade payment of duty. As a result, the penalty was reduced to the maximum prescribed amount for non-entry in the RG-I Register. The Tribunal upheld these findings, emphasizing that no duty could be confirmed on the shortages, leading to the conclusion that no mandatory penalty under Section 11AC was applicable. The High Court, after examining the evidence and the findings of the lower authorities, dismissed the appeal, finding no infirmity in the orders made by the Commissioner (Appeals) and confirmed by the Tribunal.

Proof of Intent to Evade Payment of Duty and Penalty Imposed under Rule 173Q(1) of Central Excise Rules, 1944:
The appellant contested the decision of the Hon'ble CESTAT in upholding the Commissioner (Appeals)'s order regarding the penalty imposed under Rule 173Q(1) of the Central Excise Rules, 1944, arguing that there was no proof that the entries in the RG-I Register were not made with the intent to evade the payment of duty. The Commissioner (Appeals) accepted the explanations provided by the respondent for the discrepancies in stock, concluding that there was no preparation for clandestine removal or established intent to evade duty payment. As a result, the penalty was reduced to Rs. 2000, the maximum prescribed penalty for non-entry in the RG-I Register. The Tribunal affirmed these findings, stating that no duty could be confirmed on the shortages, which precluded the invocation of mandatory penalty under Section 11AC. The High Court upheld the decisions of the lower authorities, dismissing the appeal as it did not raise any question of law, let alone a substantial one.