2008 (8) TMI 709 - AT - Central Excise

Summary

Issues:
- Confiscation of Essential Oil (Dementholised Oil)
- Provisional release of goods
- Contravention of Rule 10 of Central Excise Rules, 2002
- Interpretation of 'excisable goods'
- Requirement of mens rea for penalty imposition
- Scope of Rule 25: clauses (b) and (d)
- Decision on confiscation and penalty imposition

Confiscation of Essential Oil (Dementholised Oil):
The appeal involved the confiscation of 7200 kgs. of Essential Oil (Dementholised Oil) by the Revenue, which was earlier ordered by the Assistant Commissioner. The Commissioner (Appeals-I) set aside the confiscation and imposed a redemption fine of Rs. 50,000/- along with a penalty of Rs. 50,000/- under Rule 25 of the Central Excise Rules, 2002. The respondent argued that the oil was not a finished product as it was awaiting approval by the buyer, thus not falling under the definition of 'excisable goods.' The Commissioner accepted this defense, but the Revenue contended that the contravention of Rule 10 was evident, justifying the confiscation and penalty.

Provisional Release of Goods:
The goods were provisionally released to the respondent upon furnishing a bond and a bank guarantee. The respondent argued that the non-accountal of goods did not indicate an intention to evade payment of duty, hence no confiscation or penalty should be imposed. The respondent relied on previous judgments highlighting the necessity of mens rea for such actions.

Interpretation of 'Excisable Goods' and Rule 25:
The Tribunal analyzed the definition of 'excisable goods' and the scope of Rule 25, particularly clauses (b) and (d). The judgment emphasized that non-accountal of goods could fall under both clauses, with clause (d) requiring an intention to evade duty, while clause (b) could be triggered without mens rea. The Tribunal referred to a Larger Bench decision to support this interpretation.

Decision on Confiscation and Penalty Imposition:
After considering the arguments, the Tribunal upheld the confiscation of the goods due to the violation of Rule 10, as the goods were found in a ready-to-deliver condition. However, the imposition of a penalty was deemed unnecessary as there was no clear evidence of clandestine removal or intent to evade duty. The Tribunal set aside the Commissioner's order to the extent that the confiscation with the option of redemption was justified, but the penalty imposition was not upheld. The appeal was allowed in part, and the bank guarantee was ordered to be released after deducting the redemption fine.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision on each aspect of the case.