Tribunal reduces redemption fine and penalty due to procedural lapse

The appellate tribunal allowed the appeal, reducing the redemption fine and penalty to Rs. 50,000 each. The tribunal considered the goods were manufactured exclusively for a government scheme, not marketable outside the scheme, and the removal without permission was a procedural lapse. The reduction aimed to serve justice for the procedural breach.

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Issues:
1. Alleged clearance of electric table fans without payment of excise duty and storage without proper permission.
2. Confiscation of goods, imposition of fine and penalty.
3. Appeal against Order-in-Original and Order-in-Appeal.

Analysis:
1. The appellant, a manufacturer of electric table fans and domestic electric food mixers for exclusive supply to the Tamilnadu Government under a Rate Contract, faced a Show Cause Notice (SCN) for allegedly clearing electric table fans without paying excise duty and storing them in a rented godown without proper permission. The appellant contended that the goods were not marketable as they were manufactured for the government's distribution scheme, and the removal to the godown was due to space constraints. The appellant agreed to pay the demanded excise duty and offer a bank guarantee.

2. The adjudicating authority, in its Order-in-Original, ordered the confiscation of the electric table fans with an option for redemption by paying a fine, imposed penalties for contravention, and appropriated the bank guarantee. The appellant's appeal to the first appellate authority was rejected, leading to the current appeal. The appellate tribunal considered the contentions of both parties, reviewed the documents, and analyzed the situation.

3. The key question was whether the redemption fine and penalty imposed were justified. The tribunal noted that the goods were specifically manufactured for the government scheme, had no marketability outside the scheme, and were not diverted for sale elsewhere. The removal without permission was seen as a procedural lapse rather than an act to evade duty. The tribunal, without questioning the demand's legality, reduced the redemption fine and penalty to Rs. 50,000 each, citing that justice for a procedural breach would be served by this reduction.

4. The appeal was allowed, reducing both the redemption fine and penalty to Rs. 50,000 each. The tribunal pronounced the order in open court on 25.01.2019.

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