2016 (12) TMI 1164 - AT - Central Excise

Successful appeal on unrecorded finished goods duty. Penalty reduced, refund granted with interest.

The appellant successfully appealed the decision regarding finished goods found unrecorded during inspection, clarifying that duty for the excess goods ... Entry in RG-I register - seizure and release of goods - recovery of duty element - penalty under Rule 27 of CER, 2002 - redemption fine - refund of pre-deposit with interestEntry in RG-I register - seizure and release of goods - recovery of duty element - Whether the finished goods found at the time of inspection and seized, and thereafter released, had been cleared without payment of duty or whether duty had been recovered. - HELD THAT: - The appellant produced the original RG-I register showing the entry of 6,945.89 kg of copper sheets on 14/01/2008. This factual record, read with the Tribunal's earlier finding that the appellant agreed to deposit duty and did so, establishes that the duty element on the excess goods was recovered. The Tribunal's operative observation - that the appellant agreed to make deposit of duty and did so - was relied upon to conclude that the amount alleged to be recoverable is no longer due. The Department's show cause alleging clearance without payment was negatived on this basis.Findings recorded that duty on the excess goods was recovered; the goods were not to be treated as cleared without payment.Penalty under Rule 27 of CER, 2002 - redemption fine - refund of pre-deposit with interest - Whether the appellant is entitled to refund of the pre-deposit with interest and whether the impugned order should be set aside. - HELD THAT: - In the earlier proceedings this Tribunal had held that ingredients of Section 11AC were absent and that only penalty under Rule 27 attracted, which was limited by the Tribunal, and redemption fine was unwarranted. Having found that duty element has been recovered, the Tribunal clarified that the alleged dues are not recoverable. Consequently, the appellant is entitled to the refund of the pre-deposit; interest is payable as per rules. On these conclusions the impugned order was set aside.Appellant entitled to refund of the pre-deposit with interest; impugned order set aside.Final Conclusion: The appeal is allowed: the Tribunal found that duty on the excess goods was recovered (entry in RG-I dated 14/01/2008 and prior deposit), the departmental demand is not recoverable, the pre-deposit shall be refunded with interest as per rules, and the impugned order is set aside. Issues involved:1. Whether finished goods found unrecorded at the time of inspection were cleared on payment of duty.2. Allegation of clearance of goods without payment of duty.3. Refund of pre-deposit amount.Analysis:1. The appeal raised the issue of finished goods found unrecorded in the RG-1 register at the time of inspection and whether they were cleared on payment of duty. In a previous round of litigation, it was noted that duty for the excess goods had been recovered, but the ingredients of Section 11AC were found to be absent. The penalty imposed under Rule 27 was reduced to Rs. 5,000, and the redemption fine was deleted. When the appellant sought a refund of the pre-deposit amount, a show cause notice was issued alleging non-payment of duty for the seized goods. However, it was clarified that the duty element on the excess goods had been recovered, and the amount was no longer recoverable. The appeal was allowed, and the appellant was entitled to a refund of the pre-deposit with interest.2. The allegation of goods being cleared without payment of duty was addressed during the argument. The appellant's counsel presented the original RG-I register showing the entry of the seized goods on 14/01/2008. It was confirmed that the duty element on the excess goods had been recovered, as the appellant had made the necessary deposit to resolve the dispute. Consequently, the amount of Rs. 4,77,663 was deemed no longer recoverable, and the appellant was granted the refund of the pre-deposit amount with interest. The impugned order was set aside in favor of the appellant.3. The issue of refund of the pre-deposit amount was resolved in favor of the appellant, as it was established that the duty element on the excess goods had been recovered, and the appellant was entitled to the refund with interest as per the rules. The order dictated in the open court allowed the appeal and set aside the impugned order, ensuring the appellant's right to the refund of the pre-deposit amount.