2001 (6) TMI 120 - AT - Central Excise

Summary

Issues:
- Appeal against order in appeal dated 8-12-2000 passed by the Commissioner (Appeals) dismissing appeal against order-in-original dated 8-10-1998 for confiscation of goods with option to redeem and imposing penalty under Rules 173Q and 226 of the Central Excise Rules.

Detailed Analysis:

Issue 1: Confiscation of Goods and Imposition of Penalty
The appellants, engaged in manufacturing excisable goods, had goods unaccounted for in statutory records, leading to confiscation and penalty. The Assistant Commissioner ordered confiscation with an option to redeem on payment of a fine and imposed a penalty under Rules 173Q and 226 of the Central Excise Rules. The Commissioner (Appeals) upheld this decision. The appellants challenged the order, arguing that only a penalty under Rule 226 could be imposed for non-accountal of goods, citing a Tribunal decision. The Tribunal noted the different categories of unaccounted goods and found that the provisions of Rule 173Q were not applicable as there was no evidence of intent to remove goods without payment of duty. The Tribunal referenced a previous case to emphasize that penal provisions must be strictly construed in favor of the assessee. It was concluded that the confiscation of goods was not legally justified, and only a penalty under Rule 226 could be imposed for non-accountal of goods.

Issue 2: Decision and Modification of Impugned Order
The Tribunal set aside the order for confiscation of goods with an option to redeem and reduced the penalty from Rs. 10,000 to Rs. 2,000, as the maximum penalty under Rule 226 is Rs. 2,000. The appeal was partly allowed, providing consequential relief as permissible under the law. The Tribunal's decision was based on the lack of evidence supporting the invocation of Rule 173Q and the strict interpretation of penal provisions in favor of the assessee. The Tribunal's ruling emphasized the importance of meeting specific criteria before imposing penalties or ordering confiscation of goods under the Central Excise Rules.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by the parties, the Tribunal's reasoning, and the final decision modifying the impugned order.