2014 (3) TMI 344 - AT - Central Excise

Duty demand - Confiscation of goods - Imposition of redemption fine - Held that - appellant has deposited the entire duty before issue of show-cause notice. Accordingly, we uphold the demand of duty along with interest and reduce the penalty to the extent of 25% of duty to be deposited within 30 days from the date of receipt of this order, if not so deposited, penalty equal to duty will be payable. Confiscation of the goods is upheld and imposition of redemption fine is reduced to Rs.30,000 - penalty imposed on the Managing Director Shri R. Manoharan is also upheld - Decided partly in favour of assessee.

Summary

Issues:
1. Excess stock of MS ingots detected during stock verification.
2. Allegation of clandestine removal of MS ingots without payment of duty.
3. Confiscation of seized goods and imposition of penalties.
4. Appeal against the order of the Commissioner (Appeals).

Issue 1: Excess stock of MS ingots detected during stock verification

The Central Excise officers visited the factory and found an excess of 30.525 MTs of MS ingots compared to the book balance. The excess quantity valued at Rs.4,28,937/- was seized. The stock taking was conducted by taking average weight, and the appellant argued that the alleged excess was the day's production. The adjudicating authority confiscated the excess stock and allowed redemption on payment of a fine of Rs. One lakh.

Issue 2: Allegation of clandestine removal of MS ingots without payment of duty

The Department alleged clandestine removal based on the procurement of raw materials, manufacturing process, and selling of goods. Chits found at the residence of the Managing Director indicated sales, and bill books recovered suggested the supply of scrap. The Chartered Engineer's certificate on electricity consumption was contested, but the Government Examiner of Questioned Documents confirmed the scrap supply without proper documentation. The Managing Director admitted to clearance based on chits, and the penalty under Section 11AC was imposed.

Issue 3: Confiscation of seized goods and imposition of penalties

The Commissioner (Appeals) upheld the confiscation of goods, duty demand, and penalties. The Chartered Engineer's opinion, chits recovered, and statements of involved parties were considered as evidence of clandestine removal. The appellant's argument of depositing the entire duty before the show-cause notice was rejected, leading to the imposition of penalties and redemption fine.

Issue 4: Appeal against the order of the Commissioner (Appeals)

The appeals by the appellant-company and the Managing Director were based on contesting the excess stock seizure, clandestine removal allegations, and penalties imposed. The Tribunal upheld the duty demand, reduced the penalty to 25% of duty if paid within 30 days, upheld the confiscation of goods, and reduced the redemption fine. The penalty on the Managing Director was also upheld, concluding the appeal proceedings.

This judgment addresses the issues of excess stock detection, clandestine removal allegations, confiscation of goods, and penalties imposed, providing detailed analysis of the evidence presented and legal arguments made by both parties. The Tribunal's decision reflects a balance between confirming the duty demand and penalties while allowing a reduction under certain conditions, ultimately disposing of the appeals accordingly.