- (1.) This appeal under section 35G (2) of the Central Excise Act, 1944 has been filed against the judgment and order dated 20.7.2004, passed by Custom Excise and Service Tax Appellate Tribunal in Appeal No. E/642/2004-B. The appeal has been admitted by this court on the following substantial question of law: "i) Whether the appellate Tribunal on the facts and circumstances of the case could reduce the penalty amount, which is less than the amount of penalty specified under section 11 AC of the Central Excise Act, 1944."
(2.) The brief facts of the case which are necessary to be noted for deciding this appeal are; M/s Majestic Auto Ltd. (respondent in this appeal) are engaged in the manufacture of two wheelers scooters and mopeds. A team of Central Excise Officers of Preventive Unit Meerut-I made a surprise visit to the factory premises on 10.1.2011. The officers conducted physical verification of the finished goods. On comparison of stock of finished goods, it was found that 276 numbers of two wheelers of different models were in excess and 365 number of two wheelers of different models were short. A Panchnama was prepared on the spot. The stock of excess finished goods were seized which were subsequently released on bond along with bank guarantee. A show cause notice dated 8.7.2001 was issued to the respondents as to why - (i) Seized 276 nos of two wheelers should not be confiscated under rule 173Q(I(b) of CEA, 1994. (ii) Duty amounting to Rs. 6,23,391 and automobile Cess of Rs. 4870 should be recovered under section 11A of CEA, 1994 in respect of the 365 nos of two wheelers found short. (iii) Why interest under section 11AB may not be recovered. (iv) And why penalty under rule 173Q of CEA, 1994 may not be imposed.
(3.) The adjudicating officer by order dated 25.10.2001 confiscated the seized two wheelers. However, since the goods were provisionally released a fine of Rs. 5 lacs in lieu of confiscation was imposed. Demand of Rs. 6,23,391/- levied on 365 numbers of two wheelers found short was confirmed. A penalty of Rs. 6,23,391/- was also imposed. An appeal was filed by the respondent to the Commissioner of Appeals, who by order dated 29.10.2003 rejected the appeal, while upholding the order in original. The respondent filed further appeal before Custom Excise and Service Tax Appellate Tribunal against the order of Commissioner Appeals. The Tribunal reduced the redemption fine of Rs. 2 lacs and further reduced the penalty of Rs. 3 lacs. Subject to above modification, the order impugned in the appeal was upheld. The appeal was accordingly disposed of.;