CESTAT Upholds Confiscation & Penalty for EOU Violation, Reduces Fines on Appeal

The Appellate Tribunal CESTAT, New Delhi upheld the confiscation and penalty imposed on a 100% Export Oriented Unit (EOU) for violating obligations regarding excess stock of marble slabs. Despite the appellant's explanation for the excess stock, the Tribunal found it unconvincing and justified the confiscation and penalty. However, considering the appellant's status and the nature of the violation, the Tribunal exercised discretion to reduce the redemption fine from Rs. 50,000 to Rs. 20,000 and the penalty from Rs. 5,000 to Rs. 2,000. The appeal was disposed of with modified fines, taking into account the circumstances of the case.

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Issues:
Violation of EOU obligations leading to confiscation and penalty reduction.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi involved the issue of violation of obligations by a 100% Export Oriented Unit (EOU) leading to confiscation and penalty. The appellant's premises were inspected, revealing an excess of 375.29 Sqm. of marble slabs valued at Rs. 3,72,839. The original authority confiscated the excess stock with an option for redemption upon payment of a fine of Rs. 50,000, a decision upheld by the Commissioner (Appeals).

The appellant argued that the excess stock might have accumulated due to dispatches of wrong measurements by unskilled laborers over the years. The appellant sought setting aside of the confiscation and penalty. The Departmental Representative reiterated the findings of the Commissioner (Appeals) supporting the confiscation and penalty.

The Tribunal noted that as a 100% EOU, the appellant was obligated to maintain daily production accounts. The substantial excess stock of marble slabs found raised concerns, with the explanation provided by the appellant being deemed unconvincing and rightly rejected by the lower authorities. Consequently, the Tribunal held the goods liable for confiscation and justified the imposition of a penalty.

However, considering the appellant's status as a 100% EOU and the nature of the violation, the Tribunal exercised discretion to reduce the redemption fine from Rs. 50,000 to Rs. 20,000 and the penalty from Rs. 5,000 to Rs. 2,000. The appeal was disposed of with the modified fines, taking into account the circumstances of the case. The judgment was dictated and pronounced in open court by Shri M. Veeraiyan, Member (T) of the Appellate Tribunal CESTAT, New Delhi.

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