2002 (5) TMI 791 - AT - Central Excise

Summary

Issues Involved:
Violation of Central Excise Act - Seizure of goods without duty demand - Confiscation of goods - Penalty under Rule 173Q - Proper maintenance of statutory records - Non-accountal of goods in RG1 register - Applicability of Bhillai Conductors case law - Mens rea to evade payment of duty - Quantum of redemption fine.

Analysis:

1. Violation of Central Excise Act and Confiscation of Goods:
The appellant, engaged in manufacturing material handling equipment, faced seizure of goods worth Rs. 88,73,082 due to non-accountal of goods in the RG1 register. The Commissioner held the goods liable for confiscation under the Central Excise Act, as clearances were made without payment of duty and not recorded in statutory records. The Commissioner imposed a penalty of Rs. 5 lakhs under Rule 173Q(1) and enforced the bond for confiscation liability.

2. Proper Maintenance of Statutory Records and Non-Accountal of Goods:
The appellant argued that non-accountal in RG1 should not lead to confiscation, citing the Bhillai Conductors case law. However, the Commissioner found the goods ready for removal without duty payment, indicating deliberate non-maintenance of statutory records. The absence of entries in RG1 raised concerns about clandestine removals, justifying the penalty under Rule 173Q(1).

3. Applicability of Bhillai Conductors Case Law and Mens Rea:
The appellant relied on the Bhillai Conductors case law to argue against confiscation, emphasizing the goods' incomplete manufacturing status and absence of duty determination for penalty imposition. The Tribunal considered mens rea to evade payment of duty, concluding that the goods were liable for confiscation due to the intentional non-entry in statutory records.

4. Quantum of Redemption Fine:
The Tribunal upheld the liability for confiscation but reduced the redemption fine from Rs. 5 lakhs to Rs. 1 lakh, aligning with the value of goods ready for removal without duty payment. The judgment emphasized the importance of proper record-keeping and adherence to the Self-Removal Procedure to prevent evasion of duty.

5. Final Decision:
The appeal was partially allowed, confirming the penalty under Rule 173Q(1) at Rs. 5 lakhs and reducing the redemption fine to Rs. 1 lakh. The judgment highlighted the significance of maintaining statutory records, preventing clandestine removals, and ensuring duty payment compliance to uphold the integrity of the Central Excise Act.