2000 (12) TMI 392 - AT - Central Excise

Summary

Issues:
1. Excess and shortages found during surprise check at the factory.
2. Seizure of Indian currency and goods based on suspicion.
3. Confiscation, penalties, and fines imposed by the Department.
4. Adjudication by Deputy Commissioner and subsequent appeal to Commissioner (Appeals).
5. Reduction of penalties and fines by the Commissioner (Appeals) in the impugned order.
6. Confirmation of duty liability and penalties under Section 11AC of the Central Excise Act.

Analysis:

1. The officers of the Directorate General of Anti-evasion conducted a surprise check at the factory of the appellants, manufacturers of wax coated paper, and discovered various excesses and shortages in the stock of finished products and raw materials. Notably, there were discrepancies in the recorded balances of wax coated paper, TD plain paper, plain poly film, and kraft paper.

2. Following the factory inspection, the officers searched the residential premises of a partner of the appellants and seized Indian currency, suspecting it to be the proceeds of clandestinely removed excisable products. Additionally, the excess stock of finished products and raw materials was also seized based on similar suspicions, leading to a show cause notice proposing confiscation of seized items and imposing penalties for alleged Central Excise Rules violations.

3. The jurisdictional Deputy Commissioner of Central Excise adjudicated the dispute, confirming duty demand on the alleged clearance of finished products manufactured from the shortage of kraft paper. Penalties and fines were imposed on the appellants and their partner under various rules, along with confiscation of goods and currency. The appellants contested this action through a reply to the show cause notice.

4. Subsequently, an appeal was made to the Commissioner (Appeals) challenging the order of adjudication. The Commissioner (Appeals) upheld certain penalties but reduced others, including the redemption fine and penalties under specific rules. The confiscation of currency was vacated, while the imposition of a personal penalty on the partner was upheld.

5. The appellate tribunal noted that a subsequent stock verification confirmed the earlier physical verification, and a partner admitted to the consumption of the shortage of kraft paper in the manufacturing process without payment of duty. Consequently, duty liability and penalties under Section 11AC were deemed justified. The confiscation of excess goods was upheld based on non-accountal and the partner's admission of clearance without duty payment.

6. Ultimately, the tribunal upheld the impugned order, affirming the penalties and fines imposed, and rejected the appeal against the decision. The tribunal found the redemption fine and penalties not excessive considering the value of the goods and the reductions made by the lower appellate authority.