2013 (11) TMI 628 - AT - Central Excise

Calndestine removal of goods Bundles of Safety matches seized Appellant transported the goods without any sort of accounting Documents produced does not prove bonafide of the assessee Held that - The defense being raised is based on the register which was not available at during investigation which leads to the inevitable conclusion that the these are created just for defending the case - The documents cannot be accepted as a bonafide records based on which relief can be granted - the seized bundles can be considered only as part of goods produced by Suriyan Match Works which were yet to be accounted on the date of seizure - thus on this quantity duty cannot be demanded or a second time by including it in the quantity of goods to be received back - the duty demanded on unaccounted clearances reduced Redemption fine reduced because fine should be related to duty sought to be evaded rather than the value of goods. Penalty u/s 11AC r.w. Rule 25of central excise rules Held that - Rule 25 of Central Excise Rules is subject to provisions of section 11AC of Central Excise Act - This is to be understood to mean that where section 11AC is applicable provisions of section 11AC will apply and not provisions of Rule 25 - This is a case of clandestine removal which is held to be proved Thus penalty under section 11AC is sustainable - the amount demanded has already been appropriated from the Security Deposit made - it is proper that the penalty is reduced to 25% of the differential duty involved Decided partially in favour of Assessee.

Issues Involved:
1. Seizure and accounting of safety matches.
2. Demand of excise duty on unaccounted goods.
3. Confiscation and redemption fine on seized goods and vehicle.
4. Imposition of penalties under Section 11AC and Rule 27 of Central Excise Rules, 2002.

Issue-wise Detailed Analysis:

1. Seizure and Accounting of Safety Matches:
The appellant, a manufacturer of safety matches, was found transporting 1194 bundles of safety matches without proper excise duty documentation, leading to the seizure of goods and the vehicle. The officers conducted further investigations at M/s. Suriyan Match Works, where the manager failed to produce job work challans for the seized goods. The appellant argued that the matches were accounted for in a separate register and cleared on payment of duty, presenting invoices and stock register entries as evidence.

2. Demand of Excise Duty on Unaccounted Goods:
The Revenue issued a Show Cause Notice demanding duty on 3885 bundles of matches which were allegedly clandestinely removed without payment of excise duty. The appellant contended that the disputed quantity of raw material and matches returned by Suriyan Match Works were properly accounted for, presenting a reconciliation of dipped splints and match sticks. However, the tribunal found that the defense was based on a register not available during the investigation, concluding that these documents were created to defend the case. Consequently, the duty demand was reduced to Rs.63,926/-.

3. Confiscation and Redemption Fine on Seized Goods and Vehicle:
The tribunal agreed with the appellant that the seized bundles should be considered as part of goods produced by Suriyan Match Works and not accounted for on the date of seizure. Thus, the duty on these goods could not be demanded a second time. The redemption fine on seized matches was reduced to Rs.15,000/- to align with the duty sought to be evaded. The confiscation of the vehicle was deemed sustainable, despite objections regarding the issuance of notice to the actual owner or driver, as the notice was issued to the person who executed the bond for provisional release. The redemption fine for the vehicle was reduced from Rs.60,000/- to Rs.15,000/-.

4. Imposition of Penalties under Section 11AC and Rule 27 of Central Excise Rules, 2002:
The tribunal upheld the penalty under Section 11AC, considering the case as one of clandestine removal, but reduced the penalty to 25% of the differential duty involved, amounting to Rs.15,982/-. The penalty under Rule 27 was set aside, as it is applicable for offenses not covered by other provisions. The tribunal noted that the amount demanded had already been appropriated from the security deposit.

Conclusion:
The appeal was partially allowed by modifying the impugned order, reducing the duty demand, redemption fines, and penalties as detailed above. The judgment emphasized the importance of proper documentation and accounting in compliance with excise duty regulations.

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