2018 (4) TMI 1496 - AT - Central Excise

Clandestine removal - excesses of final products - confiscation - redemption fine - penalty - Held that - As regards, the seizure and confiscation of their goods even from the premises of M/s. Shivaji Industries, the appellants total clearances, as reflected in their records was to the extent of around ₹ 27 lakh. As such, even if the goods seized at the time of visit of the officers, totally valued at ₹ 42 lakh are taken into consideration, the goods seized from M/s. Shivaji Industries along with the goods found in the premises of M/s. Sippy Auto Manufacturing Company, the same would be much below the small scale exemption limit of ₹ 1.5 crores - also by appreciating the fact that there is no evidence indicating that goods in question were meant for clandestine activity, I find no justifiable reason for confiscation of the same - confiscation - set aside. Penalty - Held that - the appellants have admitted their duty liability and even if the total clearance fall under ₹ 1.5 crore exemption limit, in terms of N/N. 8/2003, they have accepted the clandestine activity - penalty upheld - quantum reduced from ₹ 5 lakh to ₹ 2,00,000/-. Seizure and confiscation of the goods, at the premises of M/s. Sippy Auto Manufacturing Company - Held that - as per the admission of appellant themselves, the said goods were manufactured and cleared from the premises of M/s. Shivaji Industries without payment of duty - appreciating the fact that no duty liability is fastened upon M/s. Sippy Auto Manufacturing Company inasmuch as he is only the trader, the redemption fine reduced from ₹ 4 lakh to ₹ 1,00,000/- and penalty from ₹ 2.50 lakh to ₹ 50,000/-. Appeal allowed in part.

Summary

Issues:
1. Seizure and confiscation of goods for alleged clandestine removal
2. Imposition of redemption fine and penalties on the appellants

Analysis:

Issue 1: Seizure and confiscation of goods for alleged clandestine removal
The case involved M/s. Shivaji Industries, engaged in manufacturing motor vehicle parts, and M/s. Sippy Auto Manufacturing Company, a trading unit. Central Excise officers conducted searches at both premises and found excess goods with the brand name "SIPPY." The officers suspected clandestine removal and seized the goods. The appellant admitted to clandestine activity and paid duty of approximately ?28 lakh. The original adjudicating authority imposed redemption fines and penalties, which were challenged on the grounds of lack of evidence supporting the duty confirmation. The appellate tribunal noted that the total clearances of the appellants were below the exemption limit of ?1.5 crores. As there was no evidence of clandestine activity and the goods seized were within the exemption limit, the confiscation was set aside.

Issue 2: Imposition of redemption fine and penalties
The appellants accepted their duty liability and admitted to clandestine activity. The Revenue argued for the justification of confiscation and penalties based on the admission. The tribunal upheld the imposition of penalties but reduced the amounts considering the circumstances. The penalty on M/s. Shivaji Industries was reduced from ?5 lakh to ?2,00,000, and the redemption fine and penalty on M/s. Sippy Auto Manufacturing Company were reduced from ?4 lakh to ?1,00,000 and from ?2.50 lakh to ?50,000, respectively. The tribunal acknowledged the admission of clandestine activity but differentiated the liability between the manufacturing unit and the trading unit, leading to the reduction in penalties.

In conclusion, the appeal was rejected with modifications in the quantum of redemption fines and penalties, considering the evidence, admissions, and exemption limits under the law.