2016 (10) TMI 738 - AT - Central Excise

Evasion of Central Excise Duty - search of premises - removal of goods without payment of duty - confiscation of goods with an option to pay redemption fine - imposition of penalty - legality of Redemption Fine and penalty imposed - Held that - Once the amount payable under Cenvat Credit Rules is held as duty of excise, the inputs and capital goods removed without payment of amount on duty from the factory of the first appellant shall be treated to have been removed without payment of duty, making the same liable to confiscation under Rule 25(1) of the Central Excise Rules, 2002. The decision in the case of Roll Well Conveyor vs. Jt. Commissioner of Central Excise, Thirupathi 2009 (6) TMI 110 - KARNATAKA HIGH COURT relied upon where similar issue was decided and it was held that confiscation of the goods and imposition of penalty by the adjudicating authority which was upheld by the Tribunal, was legal and correct and do not call for any interference. Confiscation of the goods and imposition of redemption fine in lieu of confiscation and imposition of penalty upheld - quantum of redemption fine and penalty reduced - appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
Appeals against Order-in-Appeal on Central Excise duty evasion, confiscation of goods, redemption fine, and penalty.

Analysis:
The case involved three appellants - a manufacturing unit, a job work unit, and a godown premises, all part of the same partnership firm. The central issue was the evasion of Central Excise duty by the first appellant, who removed goods without paying duty or issuing invoices. The department seized goods from the premises of the second and third appellants. The adjudicating authority ordered confiscation and imposed fines and penalties. The Commissioner (Appeals) upheld the order but reduced the fines and penalties. The main contention in the appeals was the propriety of the redemption fine and penalty imposed.

Upon careful consideration, it was established that the first appellant removed goods without paying duty or reversing credit, violating Cenvat Credit Rules. The amount payable under these rules is considered excise duty, making the goods liable for confiscation. The liability for confiscation, redemption fine, and penalty was thus confirmed. Case laws cited by the appellants were distinguished as having different factual scenarios. The Tribunal found precedents where confiscation and penalties were upheld in similar cases, supporting the decision in this matter.

The Tribunal upheld the Order-in-Appeal, confirming the confiscation of goods, redemption fines, and penalties. However, considering the circumstances, the redemption fine on the third appellant was further reduced, along with the penalty on the first appellant. The redemption fine on the third appellant was reduced to ?5,00,000, and the penalty on the first appellant was also reduced to the same amount. The impugned order was upheld with these modifications, and the appeals were disposed of accordingly.