2015 (9) TMI 1377 - AT - Central Excise

Removal/ Shifting of goods from the old factory to the proposed factory (adjacent premises) without payment of duty - Confiscation of goods - Held that - Technically there are some procedural irregularities committed by the appellants. However, the fact remains that the appellants themselves informed about the shifting of the raw materials, etc. within five days of the shifting, applied for registration within the next two days and they have sufficient balance in the Modvat credit/PLA account to take care of the liability while shifting the goods. Moreover, immediately on shifting the goods, the same account would be available as credit of duty in the adjacent premises. Thus, though technically the confiscation of the goods is in order. However, keeping in view of overall circumstances, we do not see any reason to impose redemption fine of ₹ 42 lakhs. In our view ends of justice will meet if the redemption fine of ₹ 50,000/- (Rupees fifty thousand) is imposed. Further, we find that whatever demand has been made could have been paid from the Central credit account/PLA and further the same was available as credit on the same date in the adjacent premises. Further, the revenue themselves have allowed the shifting of the accumulated PLA balance as well as Modvat credit was allowed based upon the appellants request letter dated 11/03/2011. Keeping in view the overall circumstances of the case, in our view there is no need to demand the duty. Finished goods were cleared on payment of duty from new premises. Work-in-progress goods were converted into finished goods and cleared on payment of duty. Keeping in view the peculiar circumstances of the present case, we therefore, set aside the demands made. - Decided in favour of assessee.

Summary

Issues:
Dispute over shifting of manufacturing unit, procedural irregularities in shifting goods, imposition of duty and penalties, confiscation of goods, redemption fine, availability of Modvat credit and PLA balance.

Analysis:
1. Dispute over Shifting of Manufacturing Unit:
The case involved a dispute regarding the shifting of a manufacturing unit due to a settlement between factions. The appellant faced a situation where they had to vacate the premises by a certain date but their new factory was not ready. They shifted the unit to an adjacent place owned by their holding company. The authorities seized the goods shifted, leading to a legal battle.

2. Procedural Irregularities and Imposition of Duty:
The original authority confirmed demands for duty on finished goods, work-in-progress goods, and Cenvat credit. Confiscation of goods and imposition of fines and penalties were also ordered. The appellants argued that they had informed the department about the shifting and had sufficient balances to cover the duty liability. They contended that the work-in-progress goods should not attract duty.

3. Confiscation of Goods and Redemption Fine:
The Tribunal acknowledged procedural irregularities but noted that the appellants had intimated the authorities promptly and had adequate balances to cover the duty liability. The Tribunal reduced the redemption fine imposed by the original authority, considering the circumstances. It found no need to demand duty as goods were cleared from the new premises with duty payment.

4. Penalties and Set-Aside Demands:
Regarding penalties imposed on the appellants, the Tribunal reduced the penalties based on the roles of the individuals involved in the shifting of goods. The penalty on one director was reduced, and penalties on others were set aside. The Tribunal allowed the appeals and cross-objections in favor of the appellants based on the overall circumstances of the case.

In conclusion, the Tribunal considered the procedural irregularities, the prompt intimation by the appellants, the availability of Modvat credit and PLA balance, and the circumstances surrounding the shifting of the manufacturing unit. The Tribunal set aside the demands, reduced penalties, and imposed a lesser redemption fine, ensuring justice based on the specific details of the case.