2004 (8) TMI 543 - AT - Central Excise

Summary

Issues:
1. Confiscation of duty paid inputs stored outside the factory premises.
2. Imposition of penalty on the appellant for storing goods at a different location.
3. Appellant's request for permission to store goods outside the factory.
4. Compliance with Central Excise Rules regarding the removal of duty paid inputs.

Analysis:
Issue 1: The central issue in this case pertains to the confiscation of duty paid inputs stored outside the factory premises of the appellant. The Officers of the Central Excise Department found that certain inputs, for which the appellant had availed Modvat credit, were stored at a different location. The adjudicating authority confiscated the goods and imposed a redemption fine and penalty on the appellant.

Issue 2: The penalty was imposed on the appellant for storing the duty paid inputs at a location other than the factory premises. The Commissioner (Appeals) upheld the decision of the adjudicating authority, leading to the appellant filing an appeal against the Order-in-Appeal.

Issue 3: The appellant contended that they had requested permission from the Commissioner of Central Excise to store the goods at a hired premises due to a shortage of storage facility in their factory. The appellant had made multiple requests over the years for this permission, which was ultimately granted after six years. The appellant argued that since they were seeking permission, the confiscation of goods and imposition of penalty were unjustified.

Issue 4: The crucial aspect regarding compliance with Central Excise Rules was whether the removal of duty paid inputs from the outside location followed the prescribed procedures. The Revenue contended that the goods could only be removed on reversal of credit as per the Central Excise Rules. However, the appellant argued that they had sought permission for storage, which was eventually granted.

The Tribunal found that the appellant had diligently requested permission to store duty paid inputs outside the factory premises, in line with the Board's Circular. Despite repeated requests over several years, the permission was granted after a significant delay. The Tribunal held that the mere inaction of Revenue authorities on the appellant's request could not be the basis for penalizing the manufacturer. Therefore, the confiscation of goods and imposition of penalty were deemed unsustainable. Consequently, the impugned order was set aside, and the appeals of the appellant were allowed.