2004 (7) TMI 136 - AT - Central Excise

Confiscation of unaccounted goods - duty demand - Penalty - Shortage/excesses - Clandestine removal - Proof - two-wheeler manufacturers - HELD THAT - The details of the vehicles had been also given in Annexure appended to the Panchnama which is also to be taken as a part of the Panchnama. The mode adopted by the officers while carrying out the physical verification of the vehicles was also not disputed by the representative of the appellants who was present at the spot. Therefore the plea of the appellants that there was no shortage or excess of the vehicles in their premises had been rightly not accepted by the authorities below. Short found goods it was not essential for the Department to prove the clandestine removal of the same by producing any positive evidence. The onus was on the appellants to prove as to how the shortages of the fully finished/manufactured two wheelers took place. The only irresistible conclusion which could be drawn therefore was that those had been cleared/disposed of without payment of duty when the appellants failed to offer any plausible/tangible explanation in respect thereof. Therefore the duty demand in respect of short found vehicles had been rightly confirmed against the appellants. Similarly the confiscation of the un-accounted vehicles had also been rightly ordered and redemption fine for getting those redeemed had also been correctly imposed. Thus we do not find any illegality in the impugned order at all. However the redemption fine is reduced to Rs. 2 Lakhs and penalty to Rs. 3 Lakhs. But for these modifications in penalty and redemption fine the impugned order is upheld. The appeal of the appellants accordingly stands disposed of in these terms.

Summary

Issues Involved:
The judgment involves contesting the correctness of an order-in-appeal upholding the confiscation of unaccounted goods, duty demand confirmation, and penalty imposition on two-wheeler manufacturers.

Details of the Judgment:

Issue 1: Excess and Shortages of Two Wheelers
The appellants, engaged in manufacturing two-wheelers, faced discrepancies in stock during physical verification. The excess and shortages were not disputed during the verification, and explanations provided later were deemed unreliable. The authorities rightly rejected the belated explanations and upheld the findings of the physical verification, leading to the confirmation of duty demand and confiscation of excess goods.

Issue 2: Duty Demand on Short-Found Goods
The Department was not required to prove clandestine removal of short-found goods. The onus was on the appellants to explain the shortages, which they failed to do satisfactorily. Consequently, duty demand on short-found goods was rightfully confirmed, along with the imposition of redemption fine and penalty.

Issue 3: Bank Guarantee Encashment
The encashment of the bank guarantee without prior notice to the appellants was deemed lawful, as the guarantee was furnished for provisional release of goods. The absence of a requirement for prior notice in the bond authorized the authorities to encash the guarantee. The Tribunal's observations in a similar case were found inapplicable to the appellants' situation.

Conclusion:
After considering the arguments from both sides and examining the record, the Tribunal upheld the impugned order. However, the redemption fine was reduced to Rs. 2 Lakhs and the penalty to Rs. 3 Lakhs, based on the case's circumstances. The appeal was disposed of with these modifications, maintaining the overall decision of the authorities regarding duty demand, confiscation, and penalty.