2014 (8) TMI 915 - AT - Central Excise

Confiscation of goods - Clandestine removal of goods - penalty imposed under Rule 26 of Central Excise Rules, 2002 - clearance of the goods from the factory - Held that - On perusal of the judgement rendered in the case of Eurasia Marbles Pvt. Ltd., referred to above, it is observed that this judgement relating to 100% EOU and cannot be applied to the facts of present case. It is observed that the Commissioner (Appeals) has modified the order of adjudicating authority by reducing redemption fine to 10% of the value of the confiscated goods. I find that very liberal view was taken by the Commissioner (Appeals). I find no interference in respect of reduction of redemption fine is warranted. Regarding imposition of penalty of equivalent amount of ₹ 3,25,753/- on the confiscated goods, ld.Chartered Accountant has made a point that since the goods have not been cleared from the factory though it is admitted fact that there was excess stock of 70.375 MT of ingots which is the production of almost of 3 to 4 days clearly indicate that production was not properly recorded in the accounts, violations are clearly noted which point finger towards non-accountal with intent to clear later on. However, since goods were within factory, means rea manifesting that goods were ready for clandestine removal has not been reached the stage, accordingly, I find force in his contention that this is not the case of imposition of equivalent penalty under section 11AC and this is case of only confiscation of goods and imposition of penalty. Decided partly in favour of assessee.

Summary

Issues:
1. Reduction of redemption fine imposed on the appellant.
2. Penalty imposed under Rule 26 of Central Excise Rules, 2002 on the Managing Director.
3. Penalty imposed under Rule 25 of Central Excise Rules, 2002 on the company.
4. Confiscation of goods due to non-accountal and excess stock.

Redemption Fine Issue:
The appellant filed an appeal against the Order-in-Appeal reducing the redemption fine to 10% of the confiscated goods' value. The Chartered Accountant representing the appellant argued that the penalty equivalent to the duty was excessive, considering the circumstances where the goods were available within the factory and not ready for clandestine removal. The Commissioner (Appeals) had taken a liberal view by reducing the redemption fine, which was upheld by the judgment.

Penalty Imposition Issues:
Regarding the penalties imposed under Rule 26 and Rule 25 of the Central Excise Rules, 2002, the Chartered Accountant contended that the penalty equivalent to the duty was too high. The adjudicating authority had imposed a penalty under Rule 25 read with section 11AC of the Central Excise Act, 1944. The judgment acknowledged the excess stock of goods within the factory but noted that the circumstances did not indicate a readiness for clandestine removal. The penalty was reduced from the initial amount to a lower sum of two lakh rupees, considering the overall facts and circumstances of the case.

Confiscation of Goods Issue:
The issue of confiscation of goods arose due to the non-accountal and excess stock found during a physical verification. The Director of the company could not explain the abnormal excess stock of goods, which led to suspicions of improper accounting and possible violations. The judgment differentiated this case from a previous ruling involving a 100% EOU, emphasizing that the circumstances here did not align with that case. Ultimately, the penalty was reduced, and the appeal was partly allowed based on the evaluation of the entire case and the lack of evidence indicating a clear intent for clandestine removal of the goods.