2003 (12) TMI 424 - AT - Central Excise

Summary

Issues:
1. Confiscation of goods stored outside bonded storeroom.
2. Imposition of penalties on the appellants.

Analysis:
The case involved a show cause notice issued to the appellants for storing goods outside a bonded storeroom, despite being entered in the Daily Stock Account RG1 and tallying with the physical stock. The Commissioner of Central Excise, Surat-II adjudicated on the matter, confiscating goods valued at Rs. 5,03,39,601 under Rule 226 and imposing penalties on the appellant-company and the director under Rule 209A. The grounds taken in appeal included challenging the confiscation of goods, arguing that if there was any contravention, it should have been penalized under a different rule. The appeal also contested the penalties imposed, stating there was no wilful violation of any rule.

Upon hearing the case, it was observed that when goods are within the factory premises and properly accounted for in the RG1 stock, there is no liability for penalties or confiscation. The confiscation under Rule 226 was deemed unwarranted as the goods were accounted for as per Panchnama. Consequently, the confiscation was not upheld. It was further noted that since confiscation was not upheld, penalties on the Director and Excise Signatory under Rule 209A could not be justified and were set aside. Similarly, the penalty on the company was deemed unjustifiable under Rule 226 as the RG1 stock had the correct quantity recorded. As a result, the appeal was allowed, and the previous order was set aside.