2004 (6) TMI 364 - AT - Central Excise

Judgment overturns penalties for duty non-payment, stresses need for clear duty link

The judgment addressed the confirmation of duty demand and penalties against the appellant, involving the confiscation of diesel engines and penalties ... Confiscation Issues:- Confirmation of demand of duty and penalty against the appellant.- Confiscation of diesel engines and imposition of penalties under various sections.- Alleged technical and procedural lapses leading to the initiation of proceedings.- Interpretation of duty paid character of the goods in question.- Justification of confiscation based on the failure to hand over invoices.Analysis:1. The judgment deals with the confirmation of demand of duty and penalties against the appellant. The lower authorities confirmed a duty demand of Rs. 6,921/- along with penalties under Section 11AC and Rule 173Q of the Central Excise Rules, 1944. Additionally, 22 diesel engines were confiscated, and penalties were imposed on the appellant under various sections. The trucks were also confiscated with an option to redeem. The appellant sought to decide the appeal based on written submissions, and the matter was heard by the Judicial Member representing the Revenue.2. The case involved alleged technical and procedural lapses where the invoices did not cover the total quantity of diesel engines found during a visit to the factory premises. It was discovered that the invoices were issued but not handed over to the transporters due to a mistake. The authorities did not accept the appellant's contention that the goods were duty paid and referred to a CBEC circular in support of their position. However, the authorities passed an order against the appellant, leading to the present appeals.3. The Judicial Member found that the duty paid character of the goods was not in doubt. The Commissioner (Appeals) had observed ulterior motives behind the failure to hand over the invoices and did not accept the argument that the rectification of the lapse should prevent confiscation. The Judicial Member disagreed with this reasoning, stating that confiscation of duty-paid goods solely due to the failure to hand over invoices was not justified. As a result, the impugned order was set aside, and both appeals were allowed with consequential relief to the appellants if applicable.This judgment highlights the importance of the duty paid status of goods and the justification required for confiscation based on procedural lapses. The decision emphasizes the need for a clear link between alleged violations and the actual duty liability, ensuring that confiscation is proportionate and justified in such cases.