2006 (7) TMI 78 - AT - Central Excise

Confiscation when goods no longer available for confiscation - Dropping proceedings and thereafter released seized goods without bond, security etc. by adjudicating authority - As goods were no longer available, confiscation order set aside

Summary

Issues:
Confiscation of excess finished goods
Confirmation of duty on 497 blankets
Confirmation of duty on short found raw materials
Penalty imposition

Confiscation of Excess Finished Goods:
The appeal challenged an order allowing the revenue's appeal against dropping proceedings initiated against the appellant for discrepancies in finished goods stock. The Tribunal analyzed whether the finished goods seized during a visit could be confiscated. The appellant argued that since the goods were unconditionally released without a bond, they could not be confiscated. Citing precedent, the Tribunal agreed, setting aside the confiscation of 1007 blankets.

Confirmation of Duty on 497 Blankets:
Regarding the duty on 497 blankets, the Tribunal found that the appellant failed to prove payment of duty for these goods. Despite production records showing transfer to the warehouse, the appellant could not demonstrate clearance with duty payment. As a result, the Tribunal upheld the duty demand on the 497 blankets, as the burden of proof was not met by the appellant.

Confirmation of Duty on Short Found Raw Materials:
The show cause notice demanded duty on raw materials allegedly used to manufacture blankets removed clandestinely. The Tribunal noted that the demand was based on presumptive grounds, which the Supreme Court has previously criticized. Following the Supreme Court's precedent, the Tribunal set aside the duty confirmation on this issue, as it lacked tangible evidence.

Penalty Imposition:
Penalties imposed on issues favoring the appellant were automatically vacated, as no confiscation or duty demand was upheld. However, the appellant's failure to prove duty payment on the 497 blankets rendered them liable for penalty. The Tribunal upheld the penalty imposition in this regard. The appeal was partially allowed based on the Tribunal's findings on the issues discussed.