2005 (3) TMI 282 - AT - Central Excise

Summary

Issues:
Duty computation and payment on dyed yarn, Penalty imposition for non-payment of duty, Confiscation of dyed yarn and imposition of redemption fine.

Analysis:
1. Duty Computation and Payment: The appellant, a small unit engaged in dyeing yarn, was unaware of the excise duty imposition on dyeing activity starting from 28-2-99. Central Excise Officers found the appellant not paying duty on dyed yarn and seized stock valued at Rs. 3,21,600/-. The appellant later paid Rs. 1,15,000/- as duty. However, a show cause notice was issued for the remaining duty of Rs. 2,27,707.50, penal action, and confiscation of dyed yarn. The appellant argued that the duty computation was incorrect as the Revenue authorities treated quantities from different documents as separate goods, leading to a higher duty demand. The appellant presented evidence from invoices and challans to support their claim that the duty amount already paid was correct. The Tribunal accepted this argument, noting discrepancies in the duty calculation and electricity consumption data, and set aside the additional duty demand.

2. Penalty Imposition: The appellant contended that the non-payment of duty was due to unawareness of the duty imposition, not an intention to evade duty. Citing a precedent, the appellant argued that penalty is not warranted when duty is paid before a show cause notice. The Tribunal agreed with the appellant, considering the short period after duty imposition and the appellant's lack of awareness, and set aside the penalty.

3. Confiscation and Redemption Fine: The Tribunal reviewed the evidence, including challans and invoices, to determine that the appellant was only processing yarn for specific parties and that the duty amount already paid was sufficient. The Tribunal found no evidence of clandestine production and reduced the redemption fine from Rs. 25,000/- to Rs. 10,000/-, considering the duty amount involved. The Tribunal concluded by disposing of the appeal in favor of the appellant, setting aside the penalty and reducing the redemption fine.

In summary, the Tribunal ruled in favor of the appellant, accepting their arguments regarding duty computation, penalty imposition, and confiscation of dyed yarn. The Tribunal found discrepancies in the duty calculation, accepted the appellant's lack of awareness as a valid reason for non-payment of duty, and reduced the redemption fine based on the duty amount involved.