2015 (10) TMI 133 - AT - Central Excise

Confiscation of seized goods - penalty imposed under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11(AC) of the Act - Clandestine removal of the inputs and excess stock unaccounted in their records - Held that - factory was closed on 15-5-2010 was intimated by the respondent to the department is correct. The respondent could not inform to the department when they started production again but at the time of visit on 6-7-2010 the factory was found running which shows that the respondent was involved in the activity of clandestine manufacture of goods and clearing thereof without payment of duty without accounting them in their books of accounts. Therefore, I do not agree with the contention of the ld. Commissioner (A) that it is the case of mere non accountal of goods in their statutory records. Considering the conduct of the respondent, I hold that excess stock found during investigation was meant for clandestine clearance without payment of duty. In these circumstances, I hold that goods are liable for confiscation. The same can be redeemed on payment of redemption fine. - total duty component works out to ₹ 1.61 lakhs but redemption fine is imposed to the tune of ₹ 4 lakhs which is excessively very high. Therefore, I reduce the redemption fine to ₹ 50,000/-. As intent of the respondent is very clear, therefore, I confirm the penalty imposed by the adjudicating authority appropriate. - Decided partly in favour of assessee.

Summary

Issues:
- Confiscation of seized goods
- Penalty imposition under Cenvat Credit Rules, 2004 and Central Excise Rules, 2002

Confiscation of Seized Goods:
The case involved a situation where a factory was found with a shortage of raw materials and an excess of finished goods during an investigation. The respondent failed to provide a satisfactory explanation for these discrepancies. The revenue alleged clandestine removal of inputs and unaccounted goods without duty payment, leading to the issuance of a show cause notice. The adjudication resulted in the confirmation of duty demand for the shortage of inputs and excess finished goods, along with penalties. The Commissioner (A) confirmed the demand for the shortage of raw material but dropped the penalty for excess raw material, confirming a penalty under Rule 27 of the Central Excise Rules, 2002. The Appellate Tribunal held that the excess stock was meant for clandestine clearance without duty payment, leading to the decision that the goods were liable for confiscation. The redemption fine imposed was reduced due to being excessively high, and the penalty on the respondent was confirmed.

Penalty Imposition under Cenvat Credit Rules, 2004 and Central Excise Rules, 2002:
The revenue contended that the respondent failed to explain the shortages and excesses found in the factory during the investigation, indicating the respondent's involvement in clandestine activities. The Appellate Tribunal disagreed with the Commissioner (A) that it was a case of mere non-accounting of goods, holding that the excess stock was intended for clandestine clearance without duty payment. The Tribunal reduced the redemption fine imposed but confirmed the penalty due to the clear intent of the respondent. Ultimately, the Tribunal confirmed the penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11(AC) of the Act and ordered the confiscation of the goods, which could be redeemed on payment of a reduced redemption fine.

In conclusion, the Appellate Tribunal upheld the confiscation of the seized goods, allowed redemption on payment of a reduced fine, and confirmed the penalty on the respondent under the relevant rules.