2007 (5) TMI 540 - AT - Central Excise

Tribunal reduces penalties for EOU, emphasizes importance of record-keeping

The appeal was partly allowed as the Tribunal reduced the redemption fine and penalty imposed on a 100% Export Oriented Unit (EOU) for unaccounted stock. ... Confiscation and penalty - Non-accountal of goods Issues:Violation of statutory requirements by a 100% EOU leading to seizure of unaccounted stock and imposition of fine and penalty.Analysis:The case involves an appeal against the order of the Commissioner (Appeals) where the original authority's decision was upheld. The appellant, a 100% Export Oriented Unit (EOU), was found to have unaccounted stock during a visit by officers after intimating the Department about closure. The appellant claimed the production was to maintain machinery and argued against the presumption of clandestine clearance. The advocate contended that as a 100% EOU, maintaining statutory registers was not mandatory, seeking waiver of fines and penalties.The Tribunal noted that while maintaining accounts in a prescribed format might not be obligatory for a 100% EOU, the failure to keep private records indicating production and clearances daily was not justified. The admission of non-accounting for finished goods in the factory supported the confiscation of goods valued at Rs. 12,780. Despite no proof of clandestine removal, the Tribunal reduced the redemption fine from Rs. 3,000 to Rs. 1,000 and the penalty from Rs. 10,000 to Rs. 1,000 after considering all facts and circumstances.In conclusion, the appeal was partly allowed with the redemption fine and penalty being reduced based on the lack of evidence for clandestine removal. The judgment emphasizes the importance of maintaining records, even for 100% EOUs, to ensure transparency and compliance with statutory requirements, thereby balancing enforcement with fairness in penalties imposed.