1987 (1) TMI 278 - AT - Central Excise

Summary

Issues:
1. Confiscation of Khandsari Sugar with an option to redeem
2. Demand of duty and penalty imposition
3. Validity of the demand of compounded duty
4. Determination of actual production and removal of Khandsari sugar
5. Excessive penalty imposition

Analysis:

The judgment by the Appellate Tribunal CEGAT, New Delhi involved an appeal by a Khandsari Sugar factory against the confiscation of sugar, demand of duty, and penalty imposition. The factory was found operating clandestinely, breaking official seals, and not discharging duty liability. The Collector, Central Excise (Appeals) disagreed with the confiscation but upheld the penalty and duty demand. The factory contended that the demand was invalid due to the wrong mention of rules in the show cause notice. However, the Tribunal found that the facts constituting the contravention were clearly mentioned, and the wrong mention did not affect the validity of the demand.

Regarding the demand of compounded duty, the factory argued that the duty amount was excessive and not based on actual production. They cited a judgment requiring factual determination of production for duty assessment. The Tribunal agreed and set aside the duty demand, remanding the case to determine the actual production and removal of sugar during the specified period. The penalty imposition was also challenged as excessive, but the Tribunal rejected this argument considering the circumstances of the case.

In conclusion, the Tribunal upheld the confiscation of Khandsari sugar with an option to redeem, as well as the penalty imposition. However, the demand of duty was set aside, and the case was remanded for the determination of actual production and removal to calculate the duty accurately. The factory was directed to be given a full opportunity during this process, and the duty would be calculated at the standard rate without the concessions available under the special procedure.