Tribunal overturns confiscation order and reduces penalty, emphasizing proportionality in Central Excise Rules

The Tribunal allowed Appeal No.1053/2009, setting aside the confiscation order due to discrepancies in stock records and evidence presented. In Appeal No.1054/2009, the penalty imposed on the Managing Director was reduced from &8377; 10,00,000 to &8377; 1,00,000, considering the proportionality principle under Rule 26 of Central Excise Rules, 2002. The judgment emphasized the need for penalties to align with the offense committed, ensuring justice in light of the legal provisions and evidence presented during the proceedings.

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Issues:
Alleged clandestine removal of goods, confiscation of seized goods, penalty imposition on Managing Director.

Analysis:

Alleged Clandestine Removal of Goods:
The appellant, engaged in manufacturing bulk drugs, faced allegations of clandestine removal of goods based on incriminating documents found during a search. The show cause notice issued accused the appellant of contravening Rule 10 of Central Excise Rules, 2002 by not accounting for excess goods in the statutory daily stock register. The appellant argued that they had properly accounted for finished products in the RG 1 register, highlighting specific entries to support their claim. The department contended that the appellant did not account for 800 kgs of Cefpodoxime Proxetil, leading to the confiscation of goods and imposition of penalties.

Confiscation of Seized Goods:
The Original Authority ordered the confiscation of seized goods, including Cefpodoxime Proxetil, Cefrozil, and Cefdinir, due to alleged discrepancies in stock records. As the goods were not physically available for confiscation, a redemption fine was imposed. The appellant argued that since the goods were provisionally released and later cleared by paying duty, confiscation was unjustified. The Tribunal scrutinized the RG 1 register entries and found discrepancies in the department's allegations regarding the unaccounted goods, leading to the setting aside of the confiscation order.

Penalty Imposition on Managing Director:
The penalty of &8377; 10,00,000 imposed on the Managing Director for alleged involvement in clandestine removal and non-accounting of goods was deemed excessive. The Tribunal acknowledged evidence of clandestine removal and non-accounting of certain goods but reduced the penalty to &8377; 1,00,000, citing Rule 26 of Central Excise Rules, 2002. The judgment emphasized that penalties should be proportionate to the offense, thus modifying the original penalty amount.

In conclusion, the Tribunal allowed Appeal No.1053/2009, set aside the confiscation order, and reduced the penalty on the Managing Director in Appeal No.1054/2009, ensuring justice while considering the legal provisions and evidence presented during the proceedings.

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