2007 (3) TMI 582 - AT - Central Excise

Issues:
1. Confiscation of seized goods and imposition of penalty under Central Excise Rules.
2. Applicability of compounded levy scheme.
3. Failure to produce statutory records during Central Excise officers' visit.
4. Contravention of Rule 96ZO of Central Excise Rules.
5. Discrepancies in statements regarding manufacturing activity.

Analysis:

Issue 1: Confiscation of seized goods and imposition of penalty under Central Excise Rules:
The case involved the confiscation of 34.290 MT of M.S. ingots by Central Excise officers during a visit to the factory premises. The adjudicating authority confiscated the goods and imposed a fine of Rs. 1,00,000/- along with a penalty of Rs. 25,000/- under various rules of the Central Excise Act. The Commissioner (Appeals) upheld this decision. The appellant contended that the seized goods were duly recorded in their statutory records, specifically the RG-1 register, and therefore, the confiscation and penalty were unjustified. However, the Tribunal found that the appellant failed to inform the Central Excise department about the operation of the furnace, leading to a contravention of Rule 96ZO. The Tribunal concluded that the confiscation and penalty were justified under Rule 173Q(1)(b) of the Central Excise Rules.

Issue 2: Applicability of compounded levy scheme:
The appellant had declared the closure of their factory under the compounded levy scheme but Central Excise officers discovered manufacturing activity during a visit. The appellant argued that since they were working under the compounded levy scheme, the seized goods should not be confiscated. However, the Tribunal determined that the appellant failed to inform about the manufacturing activities, which was a requirement under the scheme. The Tribunal held that the appellant's failure to intimate the Central Excise department about the operation of the furnace was a violation of Rule 96ZO, justifying the confiscation of the goods.

Issue 3: Failure to produce statutory records during Central Excise officers' visit:
During the Central Excise officers' visit, the appellant could not produce the statutory records related to the finished goods. The appellant claimed that the seized goods were duly recorded in their RG-1 and RT-12 returns. However, the Tribunal noted that the failure to produce records, coupled with the lack of information about manufacturing activities, supported the confiscation and penalty imposed by the adjudicating authority.

Issue 4: Contravention of Rule 96ZO of Central Excise Rules:
The Tribunal found that the appellant started the operation of the Induction furnace without informing the Central Excise department, violating Rule 96ZO of the Central Excise Rules. This failure to comply with the rule was a key factor in justifying the confiscation of the goods and the imposition of the penalty.

Issue 5: Discrepancies in statements regarding manufacturing activity:
There were discrepancies in the statements provided by individuals regarding the manufacturing activity at the factory. While the appellant argued that there was no manufacturing activity and the seized goods were not related to it, the security guard's statement indicated otherwise. The Tribunal found that the statement of the security guard, supported by other evidence, established the presence of manufacturing activity, further justifying the confiscation of the goods.

In conclusion, the Tribunal rejected the appeals, upholding the confiscation of the seized goods and the imposition of penalties under the Central Excise Rules due to the appellant's failure to comply with statutory requirements and inform the authorities about manufacturing activities.

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