2017 (3) TMI 547 - AT - Central Excise

Appeal success: Penalties reduced for excess goods and shortages, evidence crucial for fair enforcement

M/s. Hindustan Gum & Chemical Limited Versus Commissioner of Central Excise & S.T., Ahmedabad

M/s. Hindustan Gum & Chemical Limited Versus Commissioner of Central Excise & S.T., Ahmedabad - TMI Issues:- Appeal against OIA No. 167/2013-AHD-II-CE/AK/COMMR-A-/AHD dated 29.08.2013- Confirmation of duty on shortage of goods- Imposition of penalty under Rule 173Q of Central Excise Rules, 1944- Confiscation of excess goods found in the factory premises- Appeal rejection by Commissioner (Appeals)Analysis:1. The appeal was filed against OIA No. 167/2013-AHD-II-CE/AK/COMMR-A-/AHD dated 29.08.2013, issued by the Commissioner (Appeals) Central Excise & Service Tax, Ahmedabad. The appellant, engaged in the manufacture of specific goods, faced shortages and excesses during a factory visit, leading to a show cause notice for duty recovery and confiscation of excess goods with penalties under Rule 173Q of the erstwhile Central Excise Rules, 1944.2. The appellant, through their advocate, expressed a willingness to not contest the duty confirmation on the shortage of goods. However, they argued that the penalty imposed, without substantial evidence of clandestine clearances, was excessive. They also claimed that a portion of the excess goods found were accounted for as defective and returned, which was not considered by the authorities. The appellant referred to the Form-V register as evidence, indicating discrepancies in the stock explanation provided to the visiting officers.3. The Revenue's authorized representative reiterated the lower authorities' findings, supporting the initial penalty and confiscation decisions. The main question for determination was whether the excess goods found were liable for confiscation and if the penalties imposed for the shortage of goods were justified. The appellant presented evidence regarding the unaccounted excess stock, specifically mentioning the return of a portion under the rules. Despite explanations provided, the authorities rejected the plea due to insufficient evidence regarding the remaining quantity.4. The appellate tribunal found that the appellant had provided adequate evidence regarding the excess stock, including details in the Form-V register. The tribunal noted the lack of evidence from the Revenue regarding clandestine removal of the shortage goods without duty payment. Consequently, the tribunal deemed the original penalties excessive and reduced the fine for excess goods to Rs. 50,000 and the penalty for shortages to Rs. 5,000 to ensure justice was served.5. The impugned order was modified to reflect the reduced penalties, partially allowing the appeal in favor of the appellant. The decision highlighted the importance of evidence in justifying penalties and confiscations related to shortages and excess goods, emphasizing the need for a balanced approach to enforcement actions.