1999 (8) TMI 444 - AT - Central Excise

Issues Involved:
1. Classification of video cassette housings without magnetic tape.
2. Confiscation of plastic component kits.
3. Confiscation of video cassettes found in the factory gate office.
4. Duty liability on 500 video cassettes found short in stock.
5. Confiscation of cassettes and video cassette housings found in the guest house.
6. Confiscation of 87 recorded video cassettes seized from the Sales Representative's residence.
7. Penalties imposed on the appellant company, General Manager, and Sales Representative.

Issue-wise Detailed Analysis:

1. Classification of Video Cassette Housings Without Magnetic Tape:
The appellants argued that video cassette housings without magnetic tape should be classified under sub-heading 3926.90 as "other articles of plastic," eligible for total exemption from duty under Notification 53/88. The Department classified them under sub-heading 85.23, liable to duty. The Tribunal agreed with the appellants, citing a previous case (E/313/91-C) where similar goods were not classified under sub-heading 85.23 as they did not contain any media. Consequently, the confiscation and duty demand on these housings were set aside.

2. Confiscation of Plastic Component Kits:
The plastic component kits seized from the tempo were confiscated as the appellants could not prove duty payment. The Tribunal upheld the confiscation due to the lack of evidence of duty discharge.

3. Confiscation of Video Cassettes Found in the Factory Gate Office:
The 10 video cassettes found in the factory gate office were confiscated since the appellants failed to establish that these had discharged duty liability. The Tribunal upheld the confiscation.

4. Duty Liability on 500 Video Cassettes Found Short in Stock:
The appellants claimed that the 500 video cassettes were sent to the assembly section for conversion, supported by letters and statements. The Tribunal accepted this explanation, noting that while the movement was not separately accounted for in statutory records, it did not warrant a duty levy. Therefore, the duty liability on these cassettes was set aside.

5. Confiscation of Cassettes and Video Cassette Housings Found in the Guest House:
The appellants did not contest the confiscation of these items and had already debited the duty on them. The Tribunal saw no reason to interfere with the adjudicating authority's decision, upholding the confiscation.

6. Confiscation of 87 Recorded Video Cassettes Seized from the Sales Representative's Residence:
The appellants argued that these were rejected cassettes returned by customers. However, the Sales Representative's statement contradicted this, indicating they were meant as free samples taken under the General Manager's direction without valid documents. The Tribunal upheld the confiscation, rejecting the appellants' plea as belated and inconsistent.

7. Penalties Imposed:
- Appellant Company: The penalty was upheld due to contravention of relevant Central Excise Rules.
- General Manager: The penalty was reduced to Rs. 1500/- considering the circumstances.
- Sales Representative: The penalty was reduced to Rs. 500/- due to his role and lack of knowledge about the excise system.

Separate Judgments:
- Judicial Member: Agreed with the appellants on the classification of video cassette housings and set aside the duty on 500 video cassettes. Upheld confiscation and penalties with some reductions.
- Vice President: Initially disagreed on the classification of video cassette housings but followed judicial discipline. Suggested further examination for plastic components and 10 video cassettes due to unclear records.
- Technical Member: Agreed with the Vice President on the need for further examination of certain confiscations.

Final Order:
In light of the majority view, the confiscation of video cassette housings without magnetic tape and the duty demand of Rs. 726.60 were set aside. The duty demand of Rs. 9,187.50 on 500 video cassettes found short in stock was also set aside. The penalties on the appellant company and General Manager were upheld with reductions, while the issue of confiscation of plastic components and 10 video cassettes was remanded for further examination.

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