1991 (2) TMI 244 - AT - Central Excise

Summary

Issues Involved:
1. Imposition of penalty on the Director.
2. Demand of duty amounting to Rs. 85,847.80.
3. Confiscation of seized materials and appropriation of security deposit as Redemption Fine.

Detailed Analysis:

1. Imposition of Penalty on the Director:
The appellants contended that the imposition of a penalty of Rs. 45,000.00 on the Director, Shri Chandulal Shah, was illegal as the license was issued in the name of the company, and the show cause notice was also addressed to the company. The Tribunal referred to the decision in Jayantilal (1990 (46) E.L.T. 249), which held that no penalty could be imposed on partners without a specific show cause notice. Similarly, in Santanu Ray v. Union of India (1988 (38) E.L.T. 264), it was emphasized that individual liability of a Director requires specific findings against that Director. Since there was no specific show cause notice to Shri Shah, the imposition of the penalty on him was set aside.

2. Demand of Duty Amounting to Rs. 85,847.80:
The appellants argued that the demand of Rs. 85,847.80 was based on assumptions and not on tangible evidence. They cited Oudh Sugar Mills (1978 (2) E.L.T. J.172) where the Supreme Court held that findings based on unwarranted assumptions are erroneous. The Tribunal noted that the Additional Collector's decision lacked reliable evidence and was based on presumptions. The mere fact that some aluminium ingots and scraps were not entered into the registers did not justify the conclusion that the appellants had clandestinely removed goods without paying duty. The demand of duty was thus set aside, extending the benefit of doubt to the appellants.

3. Confiscation of Seized Materials and Appropriation of Security Deposit:
The appellants contended that the non-entry of aluminium ingots received on 16-8-1983 and 17-8-1983 in the Raw Material Account by 17-8-1983 did not imply an intent to avoid duty payment. They relied on Durga Rolling Mills v. Union of India (1987 (29) E.L.T. 512), where it was held that entries in Form IV need not be made immediately upon receipt of raw materials. The Tribunal agreed that the entries for ingots received on 16-8-1983 should have been made by early hours of 17-8-1983, but entries for those received on 17-8-1983 could still be made. Consequently, the confiscation of 11.130 MT of ingots received on 16-8-1983 was upheld, but the confiscation of 2.156 MT received on 17-8-1983 was not justified. The Redemption Fine was reduced from Rs. 45,000.00 to Rs. 25,000.00, and the appellants were entitled to a refund of Rs. 20,000.00 from the appropriated security deposit.

Conclusion:
The appeal was partly allowed. The penalty on the Director was set aside, the demand of Rs. 85,847.80 was annulled, and the Redemption Fine was reduced, allowing a refund of Rs. 20,000.00 to the appellants.