2004 (8) TMI 509 - AT - Central Excise

Summary

Issues:
1. Confiscation of goods due to ineligibility of manufacturer for SSI benefit.
2. Imposition of penalty on the appellants under Rule 209A.
3. Redemption fine of Rs. 2000 imposed on the appellants.

Confiscation of Goods:
The appellants were dealers of Electrical Domestic Mixers of "Cellonex" brands manufactured by M/s. Lalit Products. The Department confiscated six pieces of these mixers as the manufacturer was deemed ineligible for SSI benefit due to the use of a brand name owned by someone else. The appellants received 16 pieces of mixers, sold 11, and one was returned as defective. The Tribunal found that the appellants were unaware of the manufacturer's ineligibility for SSI exemption when they held the invoices. The penalty under Rule 209A requires mens rea, which was absent in this case. Thus, the confiscation of goods was deemed unjustified.

Imposition of Penalty:
The penalty of Rs. 5 lakhs imposed on the appellants under Rule 209A was set aside by the Tribunal. It was established that the appellants did not have the requisite knowledge regarding the manufacturer's ineligibility for SSI benefit based on subsequent inquiries. The absence of mens rea, a crucial element for imposing penalties under Rule 209A, led to the conclusion that the penalty could not be sustained. Additionally, no decision was made regarding the redemption fine of Rs. 2000, as no findings were provided on this matter. Consequently, the appeal was allowed, and the penalty of Rs. 5 lakhs was revoked.

Redemption Fine:
The Tribunal did not pass a judgment on the redemption fine of Rs. 2000 imposed on the appellants. As no findings were presented on this issue, the fate of the redemption fine remained undetermined. The lack of a conclusive decision on the redemption fine further supported the Tribunal's decision to set aside the penalty of Rs. 5 lakhs, indicating a lack of clarity or justification for imposing such fines on the appellants.

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