2001 (7) TMI 159 - AT - Central Excise

Summary

Issues:
- Confirmation of demand of duty and penalty under Section 11AC of the Central Excise Act
- Confiscation of seized goods and imposition of penalty under Rule 52A read with Rule 173Q read with Rule 226 of the Central Excise Rules

Confirmation of demand of duty and penalty under Section 11AC of the Central Excise Act:
The appeal was filed against the order confirming the demand of duty and imposing penalties under Section 11AC of the Central Excise Act. The appellants argued that the excess stock found was based on counting, not actual weight, and could not be confiscated without evidence of clandestine removal. They cited a relevant case law to support their argument. The appellants also contended that the penalties were excessive and not justified as the show cause notice did not invoke suppression or misdeclaration. They relied on a previous case law to support their position. The department countered by stating that the stocktaking was done in the presence of the appellants who did not object to the shortages and excesses found. The department claimed that the show cause notice specifically mentioned the appellants' actions that warranted penalties under Section 11AC.

Confiscation of seized goods and imposition of penalty under Rule 52A read with Rule 173Q read with Rule 226 of the Central Excise Rules:
The Tribunal noted that the physical verification of stock was based on counting, not actual weight. The burden of proof was on the department to establish actual shortages and removal of goods without duty payment. The department failed to prove these allegations, leading to setting aside the demand of duty and penalties under Section 11AC. However, regarding the seizure of MS Angles, the appellants did not provide evidence of recording it in statutory records as required by Rule 53 of the Central Excise Rules. The Tribunal emphasized the importance of maintaining records to prevent clearance of excisable goods without duty payment. The excess goods not accounted for in records were subject to confiscation and penalty under Rule 173Q(1)(b). Citing relevant Supreme Court cases, the Tribunal held that penalty could be imposed irrespective of guilty intention if there was a breach of civil obligation. The excess goods were deemed liable for confiscation, and a reduced redemption fine and penalty were imposed in the interest of justice.

In conclusion, the Tribunal partially allowed the appeal, setting aside the demand of duty and penalties under Section 11AC but upholding the confiscation of the excess goods and imposing reduced penalties under Rule 173Q.