2003 (6) TMI 264 - AT - Central Excise

Summary

Issues:
Confiscation of excess iron spring leaves, imposition of redemption fine, imposition of personal penalty, application of ISI norms, mens rea for confiscation and penalty, non-maintenance of books of accounts, justification for confiscation and penalty.

Confiscation of Excess Iron Spring Leaves:
The authorities below confiscated 5.7 tons of iron spring leaves found in excess at the appellant's factory, with an option to redeem them on payment of a fine of Rs. 1,20,000. The appellant argued that the difference in stock was not real but pseudo due to the procedure followed in determining weights based on size and production mix. The appellant contended that the difference was within the tolerance limit prescribed by the Bureau of Indian Standard of Flats.

Imposition of Personal Penalty:
In addition to the confiscation, a personal penalty of Rs. 10,000 was imposed. The appellant argued that there was no evidence of intent to evade duty, and the Larger Bench decision of the Tribunal in a similar case held that without mens rea, confiscation of excess goods or penalty was not sustainable.

Application of ISI Norms and Mens Rea:
The appellant relied on the Larger Bench decision in the case of M/s. Bhillai Conductors (P) Ltd. v. CCE, Raipur, which stated that in the absence of mens rea, confiscation and penalty were not justified. The appellant also cited the case of M/s. Canara Steel Ltd. v. Commissioner of Central Excise-III, Bangalore, where a similar principle was applied by the Bangalore Bench of the Tribunal.

Non-Maintenance of Books of Accounts:
The appellate authority acknowledged that there was no evidence or allegation of intent to evade duty. Although a penalty was imposed for not maintaining proper records under Rule 173Q(1)(b), the appellant provided a plausible explanation for the excess material, which was in accordance with ISI standards. The excess weight was deemed notional rather than real, leading to the conclusion that there was no justification for confiscation or penalty.

Justification for Confiscation and Penalty:
The appellate authority found that the excess weight was not entered in the records but was within tolerance limits. The explanation provided by the appellant was considered sufficient, and it was concluded that there was no evidence of intent to evade duty. As a result, the impugned order was set aside, the appeal was allowed, and consequential relief was granted to the appellants. The stay petition was also disposed of in favor of the appellants.