2004 (1) TMI 124 - AT - Central Excise

Summary

Issues:
1. Confirmation of duty on goods found short during punchanama proceedings.
2. Confiscation of goods and imposition of redemption fine.
3. Imposition of penalty on the appellants.
4. Challenge to shortages and procedural irregularities.
5. Application of Rule 173Q for confiscation and imposition of penalties.

Analysis:

Issue 1:
The Commissioner confirmed duty of Rs. 1,23,384/- on goods found short during punchanama proceedings under Rule 9(2) of the Central Excise Rules and Section 11A of the Central Excise Act. The appellants challenged this order stating that the excess goods were due to procedural defects, not unauthorized removal. The Commissioner's order was based on evidence and records, confirming the duty demand only to the extent of Rs. 1,23,384/-. The challenge to this ground lacked merit as proper verification was undertaken.

Issue 2:
The Commissioner ordered confiscation of goods valued at Rs. 7,61,305/- seized during the punchanama proceedings, with an option for redemption on payment of a fine of Rs. 2 lakhs. The appellants argued that confiscation was improper as the goods were present in the factory and there was no attempt at removal without payment of duty. The Tribunal upheld the confiscation and redemption fine, stating that Rule 173Q required all goods in a fully manufactured condition to be entered in the RG-1 Register.

Issue 3:
The Commissioner imposed a penalty of Rs. 1 lakh on the appellants, which they challenged as excessive and disproportionate. The Tribunal found the penalty justified based on non-accountal of goods and upheld the imposition, but reduced the penalty amount to Rs. 50,000/-.

Issue 4:
The appellants contended that shortages were due to procedural irregularities, not unauthorized removal. They had paid duty before the show cause notice was issued. The Tribunal acknowledged the procedural defects but confirmed the duty demand for Rs. 1,23,384/-, emphasizing the need for proper record-keeping and compliance with excise rules.

Issue 5:
The application of Rule 173Q for confiscation and penalties was challenged by the appellants. The Tribunal upheld the Commissioner's decision, stating that proper verification and cross-verification were conducted to confirm duty demand, confiscation, and imposition of penalties. The Tribunal reduced the fine and penalty amounts, finding them harsh but upheld the overall order of the Commissioner.

In conclusion, the Tribunal partly allowed the appeal by reducing the fine and penalty amounts but upheld the Commissioner's decision on duty confirmation, confiscation, and imposition of penalties based on procedural irregularities and non-compliance with excise rules.