2017 (5) TMI 48 - AT - Central Excise

Goods found in excess - 16498 pcs were found packed in master cartoons - appellant claims that these are rejected goods - Held that - the rejected goods cannot be packed in master cartoons - Moreover, the said rejected goods are having market value and no records of these rejected goods have been maintained by the appellant. In that circumstances, it is held that these goods are packed in master cartoons for clandestine clearance of the goods, therefore, those goods have rightly been held by the adjudicating authority liable for confiscation - redemption fine is imposed on the appellant is highly excessive - the redemption fine is reduced to ₹ 50,000/- and penalty is reduced to ₹ 25,000/-. With regard to the shortage of readymade garments of 5203 pcs, the goods were in finished condition and they were required to be entered in RG-1 register which were not entered and found their lying unaccounted. As no invoices have been issued to that effect, therefore, on these goods, the appellant is required to pay duty at the time of clearance of said goods. In that account, the appellant is required to be penalised and for these non-accounted goods. The penalty imposed on the appellant is to the tune of ₹ 10,000/-. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
- Duty demanded on shortage of goods
- Redemption fine imposed on seized goods
- Penalty imposed on the appellant

Analysis:
1. Duty on Shortage of Goods:
The appellant contested the duty demanded on the shortage of goods, arguing that the excess stock of readymade garments (RMG) found in the rejected goods godown was inevitable due to manufacturing defects. They claimed that the rejected goods were not marketable as they did not have the required affixed retail selling price (RSP) as per regulations. However, the adjudicating authority found that the goods were packed in master cartoons, indicating they were meant for clandestine clearance. The tribunal upheld the confiscation of these goods and imposed a reduced redemption fine of ?50,000 and a penalty of ?25,000.

2. Redemption Fine on Seized Goods:
The appellant further challenged the redemption fine imposed on the seized goods. The tribunal observed that while a portion of the seized goods were rejected items, the remaining RMGs were in processing condition and were not entered in the RG-1 register. The tribunal reduced the redemption fine to ?50,000, considering the circumstances of the case and the mix of rejected and unaccounted goods.

3. Penalty Imposed on the Appellant:
Regarding the penalty imposed on the appellant for the shortage of 5203 pcs of RMG, the appellant argued that these goods were mixed with rejected goods and hence not entered in statutory records. However, the tribunal found that these goods were finished and required entry in the RG-1 register. As no invoices were issued, the appellant was held liable to pay duty and penalized with a ?10,000 penalty.

In conclusion, the tribunal confirmed the duty on the shortage of goods, reduced the redemption fine to ?50,000, and imposed penalties of ?25,000 and ?10,000 on the appellant. The appeal was disposed of with these orders on 26.04.2017.