2002 (2) TMI 595 - AT - Central Excise

Tribunal adjusts Central Excise duty penalties, reduces fines for appellant firm and Managing Director

The Tribunal upheld the demand of Central Excise duty but adjusted penalties and redemption fine. The penalty under Section 11AC was reduced to Rs. 50,000 ... Penalty - Mandatory penalty - Redemption fine - Penalty Issues:1. Challenge to penalty imposed on the appellants.2. Imposition of penalty on the Managing Director.3. Confiscation of tin containers and redemption fine.4. Applicability of Section 11AC of the Central Excise Act.5. Findings based on voluntary statements and denial during adjudicating proceedings.6. Reduction of penalty and redemption fine.Analysis:1. Challenge to penalty imposed on the appellants:The appellant's representative argued that as the Modvat credit available to them exceeded the duty confirmed against them, there was no intention to evade the payment of Central Excise duty. Citing relevant case laws, the representative contended that when an assessee is eligible to claim Modvat credit higher than the duty liability, there cannot be an intention to evade duty. Additionally, it was highlighted that if the demand invoking the extended period is not upheld, penalty under Section 11AC would not be sustainable.2. Imposition of penalty on the Managing Director:The appellant's representative raised concerns regarding the lack of specific findings to justify the penalty imposed on the Managing Director. It was argued that for invoking the provisions of Rule 209A of the Central Excise Rules, specific findings are necessary regarding how the appellants dealt with the goods liable for confiscation. The absence of such findings questioned the basis for imposing the penalty on the Managing Director.3. Confiscation of tin containers and redemption fine:The Adjudicating Authority had ordered the confiscation of tin containers with an option to redeem them on payment of a fine of Rs. One lakh. The appellant's representative deemed this fine excessive and raised objections to the redemption amount. The Tribunal considered the circumstances and reduced the redemption fine to Rupees Twenty-five thousand, finding the initial amount disproportionate.4. Applicability of Section 11AC of the Central Excise Act:The Departmental Representative argued that the appellants' actions, such as returning their Central Excise Registration and clearing excisable goods without payment of duty, demonstrated an intention to evade payment of duty. Consequently, the provisions of Section 11AC of the Central Excise Act were deemed applicable.5. Findings based on voluntary statements and denial during adjudicating proceedings:The Commissioner (Appeals) based the findings on voluntary statements made by individuals associated with the appellants, which were not retracted. These statements were considered admissible under Section 9D of the Central Excise Act. Despite denials during adjudicating proceedings, specific findings were relied upon to support the imposition of penalties and confirmations of duty demand.6. Reduction of penalty and redemption fine:Based on the specific findings and circumstances of the case, the Tribunal upheld the penalty under Section 11AC of the Central Excise Act on the appellant firm but reduced it to Rs. 50,000. The redemption fine was also reduced from Rs. One lakh to Rupees Twenty-five thousand. The personal penalty imposed on the Managing Director was set aside due to the absence of specific findings to justify the penalty.In conclusion, the Tribunal upheld the demand of Central Excise duty but made adjustments to the penalties and redemption fine, considering the circumstances and arguments presented by both parties.