2003 (8) TMI 263 - AT - Central Excise

Summary

Issues:
1. Confiscation of excess stock of pouches found during inspection.
2. Imposition of penalty under Central Excise Rules.
3. Technical objection regarding the mention of specific rules in the show cause notice.
4. Determination of whether the goods reached RG 1 stage.
5. Assessment of intention to evade payment of duty.

Confiscation of Excess Stock:
The case involved the confiscation of 1045 Kgs. of printed pouches found in excess during a Central Excise inspection. The original authority confiscated the goods under Rule 173Q of the Central Excise Rules, 1944, with an option for redemption on payment of a fine. The Commissioner (Appeals) upheld this decision, leading to the present appeal.

Imposition of Penalty:
The original authority also imposed a penalty on the appellants under the Central Excise Rules. The appellant argued that there was no intention to clear the pouches without payment of duty, as evidenced by the rejected goods still being in the factory during the inspection. The counsel contended that the goods were tailor-made for a specific customer and not marketable to others, thus challenging the confiscation and penalty.

Technical Objection:
A technical objection was raised regarding the mention of specific rules in the show cause notice. The counsel argued that the adjudicating authority invoked a rule beyond the scope of the notice. However, the Tribunal held that the mention of Rule 173Q in the body of the notice was sufficient, and previous case law supported this stance.

Determination of RG 1 Stage:
The Tribunal analyzed whether the goods had reached the RG 1 stage, crucial for duty payment. The pouches, manufactured for a specific customer with branding, were found in the factory during the inspection, indicating no intention to clear them clandestinely. While the goods had not reached RG 1 stage officially, the Tribunal concluded that there was a case of non-accountal of finished goods but not with the intent to evade duty.

Assessment of Intent:
The Tribunal found that the goods were tailor-made for a specific customer and not marketable to others, indicating no intention to evade duty. The Tribunal ruled that there was no case for confiscation or penalty as the goods were not liable for such actions. Consequently, the order of the Commissioner (Appeals) was set aside, and the appeal was allowed.