2008 (9) TMI 694 - AT - Central Excise

Summary

Issues Involved:
The issues involved in this case are the confiscation of baby receiving fabric and imposition of penalty under Rule 25 of the Central Excise Rules, 2002.

Confiscation of Baby Receiving Fabric:
The appellants, engaged in manufacturing textile articles, had a stock of 5869.7 Kgs. of baby receiving fabric in Unit-I, which was not declared in the ER-I Return filed in May 2003. The Department issued a show-cause notice for confiscating the stock and imposing a penalty under Rule 25. The Commissioner ordered confiscation of the fabric valued at Rs. 12,91,334/- with an option for redemption against payment of a fine of Rs. 1.3 lakhs. The appellants contested these proposals.

Interpretation of Rule 25:
Rule 25 of the Central Excise Rules, 2002 deals with confiscation and penalty. The rule states that if any producer removes excisable goods in contravention of the rules or does not account for such goods, they shall be liable to confiscation and penalty. However, in this case, the fabric was in a semi-finished condition and not fit for removal as the final product. The appellants had not cleared the semi-finished goods from their factory, only the finished goods. Therefore, the clauses of Rule 25 were not applicable to the case as the appellants did not contravene any provisions with intent to evade duty.

Decision and Conclusion:
After considering both sides, it was found that Rule 25 was not applicable to the case as the fabric was in a semi-finished state and had not been removed by the appellants. As a result, the confiscation and penalty imposed under Rule 25 were set aside, and the appeal was allowed. The impugned order was overturned, and the case was decided in favor of the appellants.

Separate Judgement:
No separate judgment was delivered in this case.