1998 (6) TMI 353 - Commissioner - Central Excise

Summary

Issues:
1. Condonation of delay in filing appeal and hearing the main appeal on merits.
2. Confiscation of seized stock of M.S. Ingots and Runners and Risers with an option for redemption.
3. Imposition of penalty under Rule 173Q read with Rule 226 of the Central Excise Rules, 1944.
4. Non-recording of excess production and allegations of clandestine removal.
5. Evidence of intent to remove goods without payment of duty.
6. Application of penalty provisions under Rule 226 for non-entry of production and clearance.
7. Confiscation of goods due to failure in making entries in prescribed records.
8. Reduction of fine in lieu of confiscation and penalty amount.

1. Condonation of Delay and Main Appeal Hearing:
The judgment arises from a Tribunal order condoning the delay in filing the appeal and directing the Commissioner to hear the main appeal on merits. The main appeal was filed against an Order-in-Original confiscating seized stock of M.S. Ingots and Runners and Risers, with an option for redemption.

2. Confiscation and Redemption:
The case involved a factory check resulting in the seizure of excess stock of ingots and risers. The appellants contended that there was no evidence of clandestine removal, citing legal precedents. The Commissioner observed that without proof of removal without duty payment, the confiscation and redemption order was unsustainable, following established legal principles and tribunal decisions.

3. Imposition of Penalty:
The Commissioner imposed a penalty under Rule 173Q read with Rule 226. However, it was noted that there was no evidence of intent to evade duty. The penalty was modified to align with Rule 226, which covers non-entry of production and clearance without indicating evasion, supported by relevant tribunal judgments.

4. Non-recording of Excess Production:
The case highlighted discrepancies in recorded and verified stock, with the appellants arguing against allegations of clandestine removal. The Commissioner emphasized the need for concrete evidence of removal without duty payment, citing legal precedents to support the decision.

5. Evidence of Intent:
The judgment stressed the requirement to establish beyond reasonable doubt any production and removal without duty payment. Lack of direct or circumstantial evidence indicating clandestine removal led to the decision that the confiscation and redemption order was not sustainable.

6. Penalty Provisions and Non-Entry of Production:
The penalty under Rule 173Q was modified to align with Rule 226 due to the absence of intent to evade duty. Non-maintenance of records, while a contravention, did not indicate evasion. The judgment referenced tribunal decisions to support the penalty modification.

7. Confiscation Due to Non-Entry:
Failure to make entries in prescribed records led to the liability of confiscation. However, in the absence of proven mens rea, a token fine in lieu of confiscation was deemed appropriate to meet the ends of justice.

8. Reduction of Fine and Penalty:
In conclusion, the fine in lieu of confiscation was reduced, and the penalty amount was adjusted to the maximum prescribed under Rule 226 of the Central Excise Rules, 1944, based on the detailed analysis and legal considerations presented in the judgment.