2002 (9) TMI 601 - AT - Central Excise

Summary

Issues:
1. Appeal against Order-in-Original dated 7-2-2002
2. Shortage of inputs and excess finished goods found during physical verification
3. Confiscation of excess goods, duty demand, and penalty under Rule 173Q
4. Contention regarding non-accountal of goods in RG-1 and intention to evade payment of duty
5. Interpretation of law based on relevant case laws
6. Adjudication of the appeal and modification of redemption fine and penalty

Analysis:
1. The appeal was filed against the Order-in-Original dated 7-2-2002, which was affirmed by the Commissioner (Appeals), confirming the findings of the Additional Commissioner regarding shortage of inputs and excess finished goods found during physical verification at the factory premises of the appellants.

2. The officers of the Central Excise conducted a physical verification at the factory premises and discovered a shortage of inputs involving duty and excess finished goods (BOPP films). The appellants acknowledged the shortage of inputs and debited the duty amount, but disputed the excess finished goods, claiming it to be negligible.

3. The demand for duty on the inputs found short, confiscation of excess finished goods, and imposition of penalty under Rule 173Q were confirmed by the Additional Commissioner. The Commissioner also appropriated a redemption fine and imposed a penalty on the appellants based on the findings of the verification.

4. The representative of the appellants contended that no penalty under Rule 173Q should be imposed for non-accountal of goods in the RG-1, as there was no intention to evade duty. Citing relevant case laws, the representative argued against the confiscation of excess goods and imposition of penalty without evidence of intent to evade duty.

5. The Tribunal acknowledged the legal principles established in the referred case laws, emphasizing the need to consider the facts and circumstances of each case. Despite the appellants admitting the shortage of inputs and excess finished goods, their plea to ignore the excess quantity was rejected based on their conduct and lack of explanation.

6. After thorough consideration, the Tribunal upheld the invocation of Rule 173Q against the appellants for non-accountal of inputs and finished goods. However, the redemption fine and penalty were modified, reducing them to Rs. 1,50,000 and Rs. 1,00,000 respectively. The impugned order of the Commissioner (Appeals) was upheld with the mentioned modifications, disposing of the appeal of the appellants.