2007 (3) TMI 88 - AT - Central Excise

Confiscation and penalty Revenue contended that excisable goods were found unaccounted in the factory premises, therefore liable for confiscation and accordingly penalty impose on him Held that revenue contention is not corrrect

Summary

Issues:
- Confiscation of excess inputs in a factory under Central Excise Rules
- Interpretation of Rule 173Q and Rule 209 of Central Excise Rules
- Applicability of excisable goods definition under Section 2(d) of Central Excise Act

Confiscation of Excess Inputs:
The appeal was filed against an order where excess inputs found in a factory were held liable for confiscation and a redemption fine imposed. The appellant argued that they were not operating under the Modvat Scheme and did not avail credit for the excess inputs found in the factory. They relied on Tribunal decisions in similar cases to support their contention.

Interpretation of Central Excise Rules:
The Revenue contended that unaccounted excisable goods in the factory premises are liable for confiscation under Central Excise Rules. Specifically, they sought to invoke Rule 173Q and Rule 209, which provide for confiscation and penalties for unaccounted goods by producers, registered persons, or dealers. The Tribunal's interpretation, based on previous cases, clarified that the appellant, as a mere user of raw material, did not fall under the categories specified in the rules for confiscation. The Tribunal emphasized that excisable goods, as defined in Section 2(d) of the Central Excise Act, did not apply to the raw material received by the appellant after due discharge of duty.

Applicability of Excisable Goods Definition:
The Tribunal's decision highlighted that the appellant, not being a producer, registered person, or dealer, but a user of raw material, could not be considered to have failed obligations under Rule 209 for confiscation. The raw material received after duty discharge did not fall under the definition of excisable goods, as specified in the Act. Consequently, the confiscation of raw material was deemed unsustainable, and the redemption fine was set aside, leading to the allowance of the appeal.