1996 (11) TMI 220 - AT - Central Excise

Summary

Issues:
1. Dispute regarding the stage of goods - semi-finished or fully finished.
2. Confiscation of goods and imposition of penalty.
3. Interpretation of partner's statement regarding the finished form of goods.
4. Application of penalty provisions under Rule 173Q and Rule 226 of the Central Excise Rules.

Analysis:

Issue 1: Dispute regarding the stage of goods - semi-finished or fully finished.
The respondents argued that the goods, PU Foam Sheet, were still semi-finished due to the necessity of double bonding and the presence of poplin cloth at the ends. They requested physical verification to confirm this. The department contended that the partner of the firm had stated the goods were fully finished. The tribunal found that the balance of convenience favored the respondents, as there was no evidence of clandestine removal, and upheld the order setting aside the confiscation of goods.

Issue 2: Confiscation of goods and imposition of penalty.
The adjudicating authority had confiscated the goods and imposed a penalty. The respondents argued that since the goods were not fully finished, there was no violation of Central Excise Act provisions. The tribunal considered the dispute over the finished stage of the goods and concluded that the appropriate penalty rule applicable was Rule 226 of the Central Excise Rules, imposing a penalty of Rs. 2,000, which was justified in this case.

Issue 3: Interpretation of partner's statement regarding the finished form of goods.
The partner of the firm had stated that the goods were fully finished. The department argued that this admission was conclusive evidence. However, the tribunal found that the partner's statement alone was not sufficient to establish the finished stage of the goods, considering the other evidence presented by the respondents regarding the semi-finished state of the goods.

Issue 4: Application of penalty provisions under Rule 173Q and Rule 226 of the Central Excise Rules.
The tribunal determined that the allegation that could be proven was non-accountal of goods, which was disputed by the respondents based on the finished stage of the goods. Considering the facts and case law cited, the tribunal applied Rule 226 of the Central Excise Rules for imposing a penalty of Rs. 2,000, modifying the impugned order accordingly.

In conclusion, the tribunal upheld the order setting aside the confiscation of goods, imposed a penalty under Rule 226 of the Central Excise Rules, and disposed of the appeal accordingly.