2004 (6) TMI 424 - AT - Central Excise

Tribunal Decision: Duty demand partially allowed, fines reduced, penalties adjusted

The Tribunal partially allowed the appellant's appeal regarding duty demand for shortages in fabrics but confirmed the demand. The redemption fine for ... Demand Issues Involved:1. Demand of duty for shortages in fabrics.2. Imposition of redemption fines for seized goods.3. Imposition of redemption fines for unregistered fabrics.4. Demand for duty on allegedly misdeclared fabrics.5. Imposition of penalties on various individuals.Analysis:Issue 1: Demand of Duty for Shortages in FabricsThe appellant did not dispute the demand of Rs. 1,54,102 for shortages in fabrics found during a search at their premises. Consequently, the duty demand was confirmed.Issue 2: Imposition of Redemption Fines for Seized GoodsRegarding the redemption fine of Rs. 50,000 for goods seized from the godown, the appellant argued that the goods were returned by the buyer as defective after being cleared with duty payment. As the appellant provided duty payment documents, the confiscation was deemed incorrect, and no fine was upheld.Issue 3: Imposition of Redemption Fines for Unregistered FabricsThe imposition of a redemption fine of Rs. 3,00,000 for unregistered fabrics seized from the premises was challenged by the appellant. It was argued that there was no mens rea for not registering the production in the RG1 register, and confiscation under Rule 173Q(b) was not warranted. The Tribunal held that the absence of mens rea precluded confiscation, and the fine was set aside.Issue 4: Demand for Duty on Allegedly Misdeclared FabricsThe demand for duty of Rs. 52,73,773 was based on various evidences, including the Gray Inward Register and statements of employees. However, the Tribunal found discrepancies in the quality descriptions in the register and statements. The statements were deemed unreliable due to alleged duress, retractions, and contradictions, leading to the demand being questioned and ultimately failing.Issue 5: Imposition of Penalties on Various IndividualsIn light of the findings, the penalty on the appellant was reduced to Rs. 1,00,000, and penalties on the Director, Manager, and Office Superintendent were set aside as no goods were held liable for confiscation. The appeal of the appellant was partially allowed, while the appeal of the others was allowed in full.In conclusion, the Tribunal partially allowed the appeal of the appellant and fully allowed the appeals of the Director, Manager, and Office Superintendent based on the detailed analysis and findings on each issue raised in the case.