2004 (3) TMI 254 - AT - Central Excise

Summary

Issues: Confiscation and penalty on excess stock of finished goods and raw materials, applicability of Rule 173Q of Central Excise Rules, 1944, evidentiary value of confessional statement, determination of redemption fine and penalty.

In this case, the appellants, manufacturers of Steering Wheels and motor vehicle parts, were found with excess stock of finished goods and raw materials during a Central Excise inspection. The officers seized the excess items and proposed confiscation and penalty under Rule 173Q of the Central Excise Rules, 1944. The Manager (Accounts) admitted the excess stock, but could not explain the discrepancy. The adjudicating authority confiscated the goods with an option to redeem them against a fine of Rs. 2 lakhs and imposed a penalty of Rs. 50,000. The appeal against this decision was filed by the appellants.

The Counsel for the appellants argued that Rule 173Q does not apply to inputs, citing a Tribunal decision. They also contended that the confessional statement of the Manager (Accounts) should not be considered as he was not competent to comment on the excess stock. The Department argued that the Manager was authorized to give the statement and admitted the excess stock. They cited another Tribunal decision to support the applicability of Rule 173Q to inputs.

The Member (J) analyzed the submissions and ruled that Rule 173Q applies only to contraventions related to finished goods, not inputs, as per previous Tribunal decisions. The confiscated finished goods were admitted to be in excess, and the Manager's statement was not retracted. The liability for confiscation of finished goods was established. However, the redemption fine of Rs. 2 lakhs was deemed excessive for goods valued at around Rs. 1 lakh. The redemption fine was reduced to Rs. 10,000, and the penalty was reduced to Rs. 5,000, considering the value of inputs not liable for confiscation under Rule 173Q. An amount of Rs. 5,000 already deposited was appropriated towards the penalty. The impugned order was modified accordingly, and the appeal was disposed of.