2001 (6) TMI 143 - AT - Central Excise

Summary

Issues:
1. Appeal against order-in-original demanding Central Excise duty and imposing penalty.
2. Confiscation of goods supplied to customers on grounds of non-duty payment.
3. Interpretation of rules regarding confiscation, penalty, and redemption fine.

Analysis:
1. The appeal was against an order demanding Central Excise duty and imposing a penalty on a manufacturing company. The Tribunal set aside the penalty and duty demand for certain items, remanding the matter for further decision. The appellant had obtained goods with alleged non-duty payment, leading to confiscation. The Commissioner's decision was based on the premise that buyers were not required to ascertain duty payment, citing a previous court ruling. The goods were allowed redemption on payment of a fine, with no penalty imposed on the appellant.

2. The Tribunal found that the imposition of penalty was unwarranted as the duty payment was shown in documents provided by the manufacturer. The confusion regarding Modvat credit and duty rates contributed to the alleged violation. The Collector's decision to impose a heavy redemption fine, almost equal to the duty paid, was deemed unjustified. The lack of a prescribed format for determining redemption fine under Section 34 of the Central Excise Act was noted, and the confiscation and fine were not upheld.

3. The show cause notice did not specify any rule violation by the present appellant, unlike for another buyer. The lack of contravention of Central Excise Act provisions for the purchasers raised doubts about the confiscation and fines imposed. Examination of the alleged violations under various rules revealed that only Rule 173Q(1)(a) regarding removal of excisable goods in contravention was applicable. The liability for confiscation under this rule was analyzed to be a continuous liability on the manufacturer until the goods are received by an independent buyer, shifting the liability to a different rule. The order of confiscation was set aside, and the appeal was allowed based on these findings.