1998 (8) TMI 407 - AT - Central Excise

Issues Involved:
1. Confiscation of excess tin containers and imposition of redemption fine.
2. Demand for duty on shortfall of tin containers.
3. Demand for duty on clandestinely removed tin containers.
4. Imposition of penalties on the appellants and their officers.
5. Confiscation of plant and machinery with an option to redeem.
6. Inclusion of the cost of corrugated cartons in the assessable value.
7. Inclusion of escalation charges in the assessable value.
8. Inclusion of cost of plastic caps and liners in the assessable value.
9. Inclusion of cost of plastic locks, keys, and legs in the assessable value of Balvikas boxes.

Detailed Analysis:

1. Confiscation of Excess Tin Containers and Imposition of Redemption Fine:
The Collector confirmed the confiscation of 43,339 tin containers valued at Rs. 1,94,855.40 found in excess under Rule 173Q (1)/226 of Central Excise Rules, 1944, and granted the appellants the option to redeem the same on payment of Rs. 20,000/-. The appellants contended that the excess was due to the absence of dealing staff and not due to any clandestine removal. However, the Collector relied on admissions from various company officers, including the Factory Manager and General Manager, who acknowledged lapses in record-keeping. The Tribunal upheld the Collector's finding, noting that the subsequent defense was an afterthought and flimsy.

2. Demand for Duty on Shortfall of Tin Containers:
The Collector demanded duty of Rs. 710.99 on 1,214 tin containers valued at Rs. 3,554.97 found short under Rule 9(2) of Central Excise Rules read with Section 11A of the C.E. Act, 1944. The appellants argued that the shortfall was due to the absence of dealing staff. The Tribunal confirmed the Collector's finding, stating that the appellants' defense was not credible given the admissions from company officers.

3. Demand for Duty on Clandestinely Removed Tin Containers:
The Collector demanded duty of Rs. 9,87,416.28 for clandestinely removed tin containers as detailed in Annexures D.8 and D.9 to the show cause notice. The investigation revealed that the company had removed tin containers without payment of duty and without issuing Central Excise gate passes. The Tribunal noted the clear admissions from the company's General Manager and other officers, as well as corroborative statements from third parties, and upheld the Collector's finding of clandestine removal.

4. Imposition of Penalties on the Appellants and Their Officers:
The Collector imposed a penalty of Rs. 3,00,000/- on the appellants under Rule 173Q (1) of C.E. Rules, 1944, and Rs. 10,000/- each on the MD, GM, and Factory Manager under Rule 209A. The Tribunal reduced the penalty on the appellants to Rs. 2,00,000/- in view of the likely relief on returnable containers but confirmed the personal penalties on the officers, noting their deliberate involvement in the offenses.

5. Confiscation of Plant and Machinery with Option to Redeem:
The Collector ordered the confiscation of the plant and machinery used for illicit manufacture and clandestine removal of goods under Rule 173Q (2) of C.E. Rules, 1944, with an option to redeem the same on payment of a fine of Rs. 5,00,000/-. The Tribunal reduced the redemption fine to Rs. 3,00,000/-, considering it excessive.

6. Inclusion of Cost of Corrugated Cartons in the Assessable Value:
The Collector included the cost of corrugated cartons in the assessable value, noting that the company had suppressed this information from the department. The appellants argued that the cost of durable and returnable packing should be excluded. The Tribunal remanded this issue for de novo consideration, instructing the lower authority to decide in light of relevant judgments.

7. Inclusion of Escalation Charges in the Assessable Value:
The Collector included escalation charges in the assessable value, noting that the company had already paid Rs. 1.21 lakhs against the total payable amount of Rs. 7,69,191.50. The Tribunal found no infirmity in the Collector's order and confirmed the demand.

8. Inclusion of Cost of Plastic Caps and Liners in the Assessable Value:
The Collector included the cost of plastic caps and liners in the assessable value, based on admissions from company officers and corroborative statements. The Tribunal upheld the Collector's finding, noting that these accessories were essential and formed part of the finished goods.

9. Inclusion of Cost of Plastic Locks, Keys, and Legs in the Assessable Value of Balvikas Boxes:
The Collector included the cost of plastic locks, keys, and legs in the assessable value of Balvikas boxes, noting that the company had suppressed this information from the department. The Tribunal confirmed this portion of the order, as the appellants did not seriously contest it.

Conclusion:
The Tribunal modified the Collector's order to the extent of reducing the penalties and remanding the issue of the cost of corrugated cartons for de novo consideration. The appeals were disposed of accordingly.

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