2004 (2) TMI 424 - AT - Central Excise

Summary

Issues:
1. Confiscation of seized goods for non-accounting in RG 1.
2. Determination of seized goods as defective.
3. Validity of the appellant's explanation for not entering goods in RG 1.
4. Establishing the intention of selling/removing defective goods without duty payment.

Analysis:
1. The case involved the confiscation of seized goods by the Commissioner due to non-accounting in RG 1. The officers found a significant number of PVC insulated tapes in the appellant's factory not recorded in RG 1, leading to the seizure. The appellant argued that the goods were defective and not fit for marketing, hence not entered in RG 1 for salvage operations under Rule 57F(3).

2. The Commissioner rejected the appellant's plea, stating that the seized goods were not defective based on their presence in the factory. However, upon review, it was established that the seized goods were indeed defective, as evidenced by the Panchanama. The argument that the goods could not be defective due to their presence in the factory for six months was dismissed, affirming the appellant's claim of defects.

3. The appellant's explanation for not entering the defective goods in RG 1 was deemed valid, as they followed a salvage process involving an outside party to make the goods marketable. The Department failed to prove that the defective goods were intended for sale or removal without duty payment, supporting the appellant's contention regarding the salvage operation.

4. Ultimately, the Tribunal allowed the appeal, setting aside the Commissioner's order of confiscation. The decision was based on the established defectiveness of the seized goods, the validity of the appellant's salvage process explanation, and the lack of evidence regarding the intent to sell or remove defective goods without duty payment.