M/S. Sudhir Tobacco Company, V.P. Singh, G.M Vs. Cce, Lucknow - Court Judgment

Excerpt:
central excise act, 1944 - section 11ac -per d.n. panda, j. 1. learned consultant shri handa mentions that without any clandestine removal of cigarettes being made the authority seized the goods and confiscated the same with an option to redeem the same on payment of redemption fine.  the goods were valued at 53,955/-, calculating the excise duty involvement of rs. 1,52,358/- holding that the goods to have been manufactured illegally and unaccounted.  it was also alleged that the said goods were intended to be removed clandestinely.  so far as shortage of goods is detected the authority alleged that the goods were clandestinely removed.  central excise duty of rs. 1,11,351/- was determined on that account. 2. apart from the above liability, there was penalty of rs. 1,11,351/- imposed under rule 25 of central excise rules, 2002, read with section 11ac of central excise act, 1944.  so also penalty of rs. 1,11,351/- was imposed on shri v.p. singh, general manager under rule 26 of central excise rules, 2002. 3. shri handa explains that there was no shortage of goods at all found but only for the wrong calculation, shortage was shown.  similarly, goods lying on floor which was confiscated were awaiting packing.  accordingly not only pre-deposit may be waived, appeal may also be decided. 4. on the other hand, it is submission of the revenue that both the discrepancies detected were on the basis of physical stock verification done on 30th august, 2009.  when the investigation team entered into the premises, the workers fled away switching off generator so that in the dark, investigation could not be conducted.  the officers found that there were two cigarette manufacturing machine installed and loose manufactured cigarettes were found on the floor.  there was nothing left over for process of packing to be completed.  accordingly, those goods were seized. 5. it is also revenues case that when during physical verification shortage of cigarettes was detected, no satisfactory explanation came out from appellant.  investigating authority was bound to hold that the quantity lying on the floor was unaccounted and the goods found short were clandestinely removed.  accordingly, investigation concluded that the quantity lying on the floor should fetch revenue by seizure and confiscation.  therefore, investigation confiscated the goods after seizure and gave an option to the appellant to redeem the same on payment of redemption fine.  when investigation detected above discrepancy, appellant failed to rebut the charges in the show cause notice leading evidence to prove that the appellant had not made clandestine removal of goods resulting in shortage of goods nor the goods remained unaccounted. 6. heard both sides and perused the record. 7. when both sides agree for disposal of appeal, waiving requirement of pre-deposit, in both the cases, appeals are disposed by this common order. 8. investigation was made to the premises of appellant on 30th august, 2009.  there was no evidence led by the appellant to show that the shortage detected was not correct.  clandestine removal sustained.  it was categorically admitted in the course of recording statement under section 14 of central excise act, 1944 from shri v.p. singh, g.m. that seal of the department put on machine was broken and unaccounted manufacture of goods was done.  although certain explanation was given attributing negligence of employees towards shortage detected, that was failed to be proved by the appellant.  accordingly the goods found on the floor coupled with broken seal of the machine resulted with confiscation of goods and resulted in levy of duty as well as redemption fine.  shortage of goods invited levy of duty.  so also, other consequences of law has to follow.  adjudicating authority at page 1 of adjudication order has brought out the methodology of functioning of the appellant which became questionable.  so also he brought out at page 4 of the order about shortage detected fully examining books of account of the appellant.  when the appellant created confusion to the authority without cogent evidence being lead to explain shortage detected, that was made liable to duty.  above findings remained uncontrovered at this stage. 9. making an overall assessment of modus operandi and also connection and involvement of general manager in the functioning of the appellant, it was proved that the appellant has resorted to the practice causing evasion of revenue un-accounting goods and removing goods without payment of duty.  therefore, excise duty demand of rs. 1,11,351/- is confirmed and appeal on this count is dismissed.  so far as redemption fine is concerned, when the goods were valued at rs. 53,955/- and that has suffered excise duty of rs. 1,52,358/-, it may not be improper to reduce the redemption fine of rs. 39,000/- to rs. 5,000/-.  appeal on this count is partly allowed.  it may be stated that while making provisional release of confiscated goods, bank draft was furnished by the appellant and that was appropriated.  there is no intervention to that by this order. 10. so far as penalty of rs. 1,11,351/- is concerned when the appellant has committed the aforesaid breach of law by way of removal of goods without payment of duty as well as attempted to remove the goods confiscated it is justified to impose penalty.  keeping in view the earliest detection and the appellant's cooperation to reduce the litigation making deposit of duty by bank draft already appropriated in adjudication, penalty of rs. 1,11,351/- may be reduced to 25% of the duty amount of rs. 1,11,351/-.  appellant gets partial relief on this count. 11. so far as penalty of rs. 1,11,351/- imposed on shri v.p. singh, g.m. is concerned, looking into the suffering as has already been directed above, it would be proper to levy penalty of rs. 30,000/- on him. 12. with the aforesaid observation and directions both the appeals are allowed partly.  so also stay applications get disposed.