2002 (2) TMI 405 - AT - Central Excise

Summary

Issues:
- Interpretation of Rule 226 of the Central Excise Rules, 1944 regarding confiscation of goods for non-entry in prescribed books.
- Applicability of Rule 226 in cases of non-accountal of finished excisable goods.
- Relationship between penalty and confiscation under Rule 226.
- Comparison of cases under Rule 173Q and Rule 226 for confiscation.

Analysis:
1. The primary issue in this judgment revolves around the interpretation of Rule 226 of the Central Excise Rules, 1944 concerning the confiscation of goods for which due entry has not been made in the prescribed book, account, or register. The Department sought a reference to the High Court on whether such goods can be considered not liable to confiscation despite the rule's clear stipulation.

2. The arguments presented by both sides focused on the applicability of Rule 226 in cases of non-accountal of finished excisable goods. The Department contended that if a penalty is imposed for non-accountal under Rule 226, confiscation of the unaccounted goods should also follow. On the other hand, the Respondent's Advocate argued that Rule 226 pertains to erroneous or irregular accountal of goods, distinguishing it from Rule 173Q which covers unaccounted goods and penalties.

3. The Tribunal examined the rival submissions and the Final Order, which upheld a penalty under Rule 226 for non-accountal of finished excisable goods. The Tribunal acknowledged that while penalty and confiscation often go hand in hand in the legal framework, Rule 226 focuses primarily on penalty, with confiscation provided as a subsequent measure. The Tribunal concluded that confiscation under Rule 226 is independent of the penalty, leading to the decision not to confiscate the goods in this case despite the imposed penalty.

4. The Tribunal further distinguished previous cases cited by both sides, emphasizing that confiscation in those cases was under Rule 173Q, not Rule 226. This distinction highlighted the specific nature of confiscation under different rules and its implications on the present case.

5. Additionally, the Tribunal considered the scope of the show cause notice issued by the Department, noting that it proposed confiscation under Rule 173Q and penalty under both Rule 173Q and Rule 226, but did not specifically propose confiscation under Rule 226. This observation led the Tribunal to reject the reference application, as the question of law framed exceeded the show cause notice's scope.

In conclusion, the judgment provides a detailed analysis of the interpretation and application of Rule 226 in the context of confiscation of goods for non-entry in prescribed books, emphasizing the distinction between penalty and confiscation under this rule and its comparison with Rule 173Q in similar cases.