2005 (10) TMI 370 - AT - Central Excise

Summary

Issues: Seizure of excess stock of finished goods, failure to enter goods in RG1 register, intent to evade duty, liability to confiscation, penalty under Rule 173Q, establishment of intent for clandestine removal of goods, correctness of Commissioner of Central Excise (Appeals) order.

Analysis:

The case involved the seizure of excess stock of finished goods by Central Excise Officers from a company engaged in manufacturing plastic goods. The goods were found both within and outside the BSR, valued at significant amounts, which were not entered in the RG1 register. The officers believed the goods were offending in nature and liable to confiscation under the Central Excise Rules, 1944. The company had also cleared the goods without debiting the Central Excise duty in RG23A Part II/PLA, admitting the offense. The Commissioner (Appeals) noted the unrecorded stock not being entered in the RG1 register for a month, indicating an intention to remove excisable goods without payment of duty, which could endanger revenue relying on the assessee's records.

Upon review, the Tribunal found that there was no independent evidence to show an intent to remove the seized goods clandestinely without discharging duty. As such, the liability to confiscation of the goods was set aside based on established legal principles from previous Tribunal decisions. Additionally, the failure of the company to enter the goods in the RG1 register led to a reduced penalty under Rule 173Q to the maximum prescribed amount of Rs. 2000 for non-maintenance of correct stock records. The Tribunal emphasized that the mere fact that the goods were not entered for a month does not automatically establish intent, as a person intending to evade duty would not risk detection by keeping goods unaccounted for an extended period.

Ultimately, the Tribunal rejected the Revenue's appeal to overturn the Commissioner of Central Excise (Appeals) order, citing the correct appreciation of material evidence and the application of relevant case law. The decision was based on the absence of sufficient grounds to establish intent for clandestine removal of goods without payment of duty, thereby upholding the original order.