1999 (4) TMI 286 - AT - Central Excise

Summary

Issues:
1. Duty demand on finished goods and confiscation of excess stock.
2. Confiscation of finished goods claimed as rejected goods.
3. Duty demand on shortage of inputs and penalty imposition.
4. Non-observance of Central Excise Rules and penalty reduction.

Analysis:

I) Excess and shortage of finished goods:
The Commissioner confirmed a duty demand on finished goods found short and confiscated excess stock. The appellant explained the discrepancies due to production delays and physical movements of goods. Lack of evidence for clandestine removal led to the set aside of duty demand and confiscation.

II) Finished goods claimed to be rejected goods:
The appellants claimed that defective goods were returned to the factory, converted into scrap, and cleared after payment of duty. The defense was unchallenged, and non-filing of D-3 intimations did not prove clandestine removal. The confiscation of finished goods was set aside due to insufficient evidence.

III) Shortage of inputs:
The appellants argued that alleged short inputs were stored in an adjacent plot owned by them. Despite procedural violations in moving inputs, the right to take Modvat credit could not be denied. The duty demand under this issue was set aside.

IV) Non-observance of Central Excise Rules and penalty reduction:
The appellants failed to comply with rules regarding defective goods and input removal intimation. A penalty was imposed for non-observance, reduced to Rs. 50,000 considering the circumstances. The appeal was disposed of with the reduced penalty.

This judgment addressed issues related to duty demands, confiscation of goods, Modvat credit, procedural violations, and penalty imposition under the Central Excise Rules. The decision highlighted the importance of evidence, procedural compliance, and burden of proof in excise matters, ultimately leading to the setting aside of duty demands and confiscations based on insufficient evidence and procedural violations.