2013 (9) TMI 726 - HC - Central Excise

Valuation of Penalty and Redemption Fine - Whether there was error in the order of the Tribunal as it does adjudicate and decide the ground of appeal that the penalty and redemption fine have been calculated by including value of accounted for stock mentioned in RG-IV Register Held that - Neither the adjudicating authority, first appellate authority nor the tribunal have dealt with and examined the grounds or answered the same - RG-IV registers, entries and whether they were found at the time of the search was neither adverted to nor dealt with. The question of law was answered in favour of the appellants and against the Revenue with an order of remand for fresh decision by the tribunal - The tribunal will examine the entire controversy once again, without being influenced by the earlier order - The tribunal will be at liberty to impose redemption fine in accordance with law without taking into notice the earlier fine - If required and necessary, the respondent will be entitled to meet and answer the contentions after verification as permitted and allowed under the rules.

Summary

Issues:
1. Interpretation of whether the Tribunal erred in including accounted for stock in calculating penalty and redemption fine.

Analysis:

Issue 1: Interpretation of Tribunal's Decision on Redemption Fine
The case involved three associate companies subjected to search and seizure operations, leading to the imposition of penalties and redemption fines. The appellants contended that only unaccounted stock should be considered for redemption fines. They argued that the RG-IV Register found during the search contained details of duly recorded purchases of raw material. The appellants claimed that the redemption fine should not have been imposed on accounted for purchases, as significant raw material was duly recorded in the register. Specific details of excess or shortage of stock and corresponding duty elements were provided for each company. However, the adjudicating authority, first appellate authority, and the tribunal did not address or analyze these contentions or the existence of RG-IV registers during the search.

Issue 1 Resolution:
The High Court found merit in the appellants' argument and ruled in their favor against the Revenue. The Court ordered a remand for a fresh decision by the tribunal, emphasizing a reexamination of the entire controversy without being influenced by the previous order. The tribunal was directed to consider the redemption fine in accordance with the law, excluding the earlier fine. The respondent was permitted to respond to the contentions after verification as allowed under the rules. To expedite the process and minimize delays, the appellants were instructed to appear before the tribunal on a specified date for fixing a hearing date.

Conclusion:
The High Court's judgment focused on the correct interpretation of the Tribunal's decision regarding the inclusion of accounted for stock in calculating penalties and redemption fines. The Court's ruling favored the appellants, leading to a remand for a fresh tribunal decision and emphasizing a thorough reexamination of the case without prior influence.