2000 (7) TMI 204 - AT - Central Excise

Summary

Issues:
1. Confiscation of seized raw materials and duty liability on finished goods.
2. Denial of Modvat credit on consumed inputs.
3. Imposition of penalty under Rule 9(2) and Rule 173Q of the Central Excise Rules.

Analysis:

1. The Central Excise officers seized excess raw material and noted duty payable on finished goods not debited in registers. The Department proposed confiscation of seized raw materials, recovery of duty on finished products, denial of Modvat credit, and imposition of penalties. The Jurisdictional Assistant Commissioner confirmed the demands and penalties. The ld. Commissioner (Appeals) upheld the decision, except for remanding the question of Modvat credit on a specific invoice. The appeal challenged the confiscation and penalties. The Tribunal found that duty was already paid on the raw materials seized, thus vacating the demand for duty. The Tribunal also set aside the confiscation order, as the seized goods were duty-paid and not excisable, hence not liable for confiscation. The penalty was reduced from Rs. 20,000 to Rs. 10,000, as intent to evade duty payment was not proven.

2. The Modvat credit on inputs already consumed was contested. The Tribunal found no serious contest on this issue and upheld the lower authorities' decision regarding the denial of Modvat credit on consumed inputs. Therefore, the orders related to Modvat credit denial were not interfered with.

3. The penalty imposed under Rule 173Q was analyzed. The lower authorities invoked clauses for irregular Modvat credit and contravention of rules with intent to evade duty. The Tribunal sustained the penalty under the Modvat credit clause but reduced the penalty under the contravention of rules clause. No finding proved intent to evade duty payment, leading to a reduction in the penalty amount. The appeal was allowed in part, resulting in a reduced penalty of Rs. 10,000 and providing consequential reliefs to the appellants.