2002 (2) TMI 173 - AT - Central Excise

Summary

Issues:
1. Clandestine removal of processed cotton/man-made fabric.
2. Confiscation and redemption of seized goods.
3. Demand of duty confirmed.
4. Disallowance of Modvat credit.
5. Imposition of penalties.

Analysis:

Issue 1: Clandestine removal of processed fabric
The appellants were found with excess processed fabric and raw material during a visit by Central Excise Officers. Statements by key individuals confirmed that goods were not recorded in statutory registers and were to be removed without duty payment. Further searches led to the discovery of additional fabric in a private godown. The appellants admitted to removing goods without proper records or duty payment. The authorities confirmed the clandestine removal of goods, leading to the initiation of proceedings.

Issue 2: Confiscation and redemption of seized goods
The Joint Commissioner of Central Excise ordered the confiscation of seized processed fabrics, providing the appellants with the option to redeem them upon payment of fines. The same procedure was followed for fabrics seized from the private godown. The order detailed the valuation and the fines imposed for redemption.

Issue 3: Demand of duty confirmed
The Joint Commissioner confirmed the demand of duty on goods clandestinely removed by the appellants. The confirmation was made under Rule 9(2) read with Section 11A(2) of the Central Excise Act, 1944, based on the quantity of fabrics removed without proper records or duty payment.

Issue 4: Disallowance of Modvat credit
The deemed Modvat credit availed by the appellants was disallowed by the authorities. The disallowance was part of the penalties imposed on the appellants for their actions related to the clandestine removal of goods.

Issue 5: Imposition of penalties
Penalties were imposed on the appellants under various sections of the Central Excise Act, 1944. These penalties included amounts related to the confirmed demand of duty, disallowed Modvat credit, and other violations. The penalties were justified based on the findings of clandestine removal and failure to comply with statutory requirements.

In the appeal against the Commissioner of Central Excise's order, the arguments made by the appellants were considered, but the appellate authority upheld the penalties and confirmed the demand of duty. The appeal was dismissed, emphasizing the seriousness of the violations and the need to enforce penalties as per statutory provisions.