2005 (4) TMI 488 - AT - Central Excise

Summary

Issues:
1. Confiscation of seized goods and imposition of redemption fine and penalty.
2. Non-entry of certain goods in the R.G. 1 register.
3. Quality of the seized goods.
4. Interpretation of Trade Notice dated 4-4-94.

Analysis:
1. The appeal was filed against the Order-in-Appeal confirming the confiscation of seized goods, redemption fine, and penalty imposed on the appellants. The Tribunal considered the manufacturing activities of the appellants related to air-conditioner parts supplied to OE manufacturers. Goods were found in the factory premises during an officer's visit, not entered in the R.G. 1 register. Seized goods were in carton boxes and loose condition, leading to separate show cause notices for confiscation and penalty. The Commissioner (Appeals) vacated seizure/confiscation of goods in carton boxes, which was upheld by the Tribunal. However, goods in an unpacked condition were subject to a different plea by the appellants.

2. The appellants argued that the unpacked goods were rejected by the Quality Control Inspector of OE manufacturers, hence not entered in the R.G. 1 register. The Tribunal accepted this argument, citing a Trade Notice from the Delhi Commissionerate requiring entry in the register only after testing and inspection. No discrepancies were found in raw materials or finished goods in the factory. The General Manager's statement indicated no further manufacturing process for the goods in question. Departmental market inquiry revealed minor defects in the seized goods. Consequently, the Tribunal set aside the impugned order and allowed the appeal with appropriate relief.

3. The Tribunal's decision was based on the lack of malice on the appellants' part for not entering goods in the R.G. 1 register, supported by evidence of rejected goods and absence of discrepancies in manufacturing processes or finished goods. The Trade Notice's interpretation played a crucial role in determining the compliance requirements for entering goods in the register post-testing and inspection. The Tribunal highlighted the absence of malpractice or intention to evade regulations in the appellants' actions, leading to the decision to set aside the order and grant relief.

4. The Trade Notice dated 4-4-94 was a significant factor in the Tribunal's analysis, emphasizing the procedural requirements for entering goods in the R.G. 1 register after testing and inspection. The appellants' compliance with this notice, coupled with the absence of malice or intentional wrongdoing, influenced the Tribunal's decision to overturn the impugned order and provide relief to the appellants. The interpretation of the Trade Notice aligned with the appellants' explanation regarding the rejected goods and the subsequent handling of seized items, contributing to the favorable outcome of the appeal.