2016 (12) TMI 435 - AT - Central Excise

Confiscation of goods - imposition of penalty - Clandestine removal - Held that - the fact that the present show cause notice is a separate stem from the same investigation and also the fact that the same goods are involved, cannot be disregarded in toto, as the liability to pay duty on the excess quantity of goods has been settled. The appellant has not been able to give any explanation for the non-accountal of excess quantity of goods. The only contention raised is that the PVC pipes were of different varieties and they were stacked up together. This contention is not tenable, as the appellants are bound to maintain proper accounts of the finished stock. Further, Rule 173(Q) of erstwhile Central Excise Rules 1944 empowers confiscation of goods for not making proper entry / not accounting the goods. Again, Shri L Mohan Kumar, Managing Director of appellant, inter alia has stated that no further manufacturing is to be done on the goods seized. Therefore, I do not find any ground to interfere with the confiscation of goods. Penalty - Held that - The facts of the case evidence contravention of the provisions of Central Excise Acts and Rules. The adjudicating authority has imposed penalty of ₹ 12,92,749/- which is equal to the duty amount settled by appellant before the Hon ble Settlement Commission and therefore, the said penalty requires no interference. The penalty of ₹ 3,00,296/- is seen imposed under 173Q r/w 226 of Central Excise Rules, 1944, which is penalty imposed at the then prevailing rate of 25% on the redemption fine, which according to me is as per law, just and reasonable. Appeal dismissed - decided against appellant-assessee.

Summary

Issues:
- Alleged clandestine manufacture and clearance of goods without duty payment
- Seizure of excess PVC pipes and waste scrap
- Failure to file a reply or appear for personal hearing
- Settlement Commission's involvement and subsequent directions
- Confiscation of goods, imposition of penalties, and redemption fine
- Argument regarding excess stock and redemption fine
- Defense of impugned order by the respondent
- Adjudication of penalties imposed on the appellant and Joint Managing Director
- Dismissal of the appeal

Analysis:
1. The case involved allegations of clandestine manufacture and clearance of goods without duty payment by M/s Monarch Pipes Ltd. Various discrepancies, including excess PVC pipes and waste scrap, were discovered during searches conducted by Central Excise officers. The assesse was issued a show cause notice for confiscation of goods and imposition of penalties.

2. Despite several opportunities, the assesse failed to file a reply or attend the personal hearing, leading to the passing of an ex-parte Order-in-Original. The matter was later remanded by the Tribunal to the adjudicating authority for further proceedings.

3. The assesse filed an application before the Settlement Commission, which initially overlooked the first show cause notice. Upon realization, the Commission directed the matter back to the adjudicating authority. Subsequently, an order was passed confiscating the goods with an option for redemption on payment of a fine and imposing penalties on the assesse and the Joint Managing Director.

4. The appellant argued that the excess stock was due to the variety of PVC pipes manufactured, and the confiscated goods were not ready for dispatch. The appellant's successor company, having taken over the defunct company, pleaded for leniency considering the circumstances.

5. The respondent defended the impugned order, highlighting the lack of a plausible explanation for the excess goods found. The respondent argued that the appellant's approach to the Settlement Commission implied an admission of liability, justifying the demands confirmed.

6. The adjudicating authority upheld the confiscation of goods, citing the appellant's failure to account for the excess quantity adequately. The argument that the pipes were of different varieties and stacked together was deemed untenable under the Central Excise Rules.

7. The appellant's contention regarding the condition of the goods over time and the redemption fine was rejected, emphasizing the value of goods at the time of confiscation. The option to redeem the goods was available but not exercised.

8. Penalties imposed on the appellant and the Joint Managing Director were analyzed, with the adjudicating authority justifying the amounts based on contraventions of Central Excise Acts and Rules. The penalties were deemed reasonable and in accordance with the law.

9. Ultimately, the appeal was dismissed, with the presiding member finding no merit in the appellant's arguments or challenges to the impugned order.