2003 (6) TMI 132 - AT - Central Excise

Summary

Issues:
1. Confiscation of excess-found final products and raw materials.
2. Demand of duty in respect of short-found Modvat credit.
3. Imposition of personal penalty under Section 11AC.

Confiscation of Excess-Found Goods:
The appellants, engaged in manufacturing HDPE Pipes and Pipe Fittings, faced confiscation of excess-found goods and raw materials by the Commissioner of Central Excise. The appellants contended that the excess stock was not intended for removal without payment of duty, as they were manufacturing goods exclusively for the Department of Telecommunication. They argued that the goods were not entered in the RG-I records as they were awaiting Quality Control Test, following their practice. The Commissioner, while accepting the appellants' contention, still confiscated the goods, differing from the Tribunal's decision in a similar case. The Tribunal held that the Commissioner was not justified in taking a different view and set aside the confiscation, emphasizing the absence of evidence of mala fides or intent to evade duty.

Demand of Duty for Short-Found Modvat Credit:
The Department alleged that the appellants had removed fresh HDPE granules after availing credit and substituted them with low priced granules. The Commissioner observed discrepancies in records and statements, leading to the confirmation of the duty demand of Rs. 11,51,089.00. The appellants argued that the granules lost luster due to prolonged storage, but the Commissioner found their explanations insufficient. The Tribunal upheld the duty demand, stating that the appellants' representatives admitted shortages and paid the duty credit involved, rejecting their new stand during adjudication.

Imposition of Personal Penalty under Section 11AC:
The appellants contested the imposition of a personal penalty under Section 11AC, citing the period being prior to its introduction. The Tribunal agreed with this contention but held the appellants liable for penalty under Rule 173Q of the Central Excise Rules. The penalty amount was reduced from Rs. 11,51,089.00 to Rs. 3.00 lakh, considering the overall facts and circumstances. The appeal was partially allowed and partially rejected, addressing the penalty reduction and duty demand issues.

This judgment from the Appellate Tribunal CESTAT, Kolkata involved detailed analysis of the confiscation of excess-found goods, demand of duty for short-found Modvat credit, and imposition of a personal penalty under Section 11AC. The Tribunal scrutinized the evidence, arguments, and legal provisions to provide a comprehensive decision on each issue, ensuring fairness and adherence to established legal principles.