2015 (3) TMI 1145 - AT - Central Excise

Clandestine removal of the goods - raw material found in their factory and the finished goods lying in their factory unaccounted - non-maintenance of the statutory records - confiscation of goods - Held that - After going through the show cause Notice and the impugned order the allegation against the appellant is that the goods lying in their factory are unaccounted and not entered in the statutory records since 21-7-2007 and till the date of visit that is 3-8-2010. On the basis of these, intent was drawn that these were lying in the factory for clandestine removal of the goods. No corroborative evidence has been produced by the Revenue to establish the intent of the appellant to remove the goods clandestinely. Therefore, following the decisions of Steel Complex Ltd., Mutual Mecaplast Ltd. 2005 (10) TMI 160 - CESTAT, BANGALORE and Pharma Indiana Laboratory (2008 (7) TMI 430 - HIGH COURT OF GUJARAT AT AHMEDABAD ) hold that in this case provisions of Rule 25 of Central Excise Rules, 2002 have not been complied with. Therefore, goods are not liable for confiscation. Consequently, redemption fine and penalty is not imposable on the appellant and penalty on Shri Harish Kumar Sharma is not imposable under Rule 26 of the Central Excise Rules, 2002. - Decided in favour of assessee

Summary

Issues:
- Confiscation of unaccounted raw material and finished goods
- Imposition of redemption fine and penalty
- Compliance with Rule 25 of Central Excise Rules, 2002

Confiscation of Unaccounted Raw Material and Finished Goods:
The case involved an appeal against impugned orders concerning unaccounted raw material and finished goods found in the factory of the main appellant, a thermocol products manufacturer. The investigation revealed discrepancies in stock maintenance and Cenvat credit availment. The appellant was alleged to be liable for duty payment on unaccounted inputs and confiscation of unaccounted finished goods. The appellant challenged the orders, arguing that raw material confiscation was not valid under Rule 25(1)(B) and cited relevant case laws supporting their contention. The department argued that due to improper record maintenance, the goods were intended for clandestine clearance without duty payment. The tribunal considered the arguments and evidence, emphasizing the importance of maintaining statutory records daily. Ultimately, the tribunal found no evidence of intent to clear goods clandestinely and ruled in favor of the appellant, holding that the goods were not liable for confiscation.

Imposition of Redemption Fine and Penalty:
The appellant contended that redemption fine and penalty were not imposable due to the absence of intent to evade duty, supported by relevant case laws. The department argued for the imposition of penalties, emphasizing the appellant's responsibility to maintain records diligently. The tribunal analyzed the arguments, noting the importance of proper record-keeping and the applicability of penalties on raw materials. However, considering the lack of evidence indicating an intent to evade duty, the tribunal ruled in favor of the appellant, concluding that redemption fine and penalty were not imposable.

Compliance with Rule 25 of Central Excise Rules, 2002:
The tribunal examined the compliance with Rule 25 of the Central Excise Rules, 2002, in the context of the case. It highlighted the lack of corroborative evidence from the Revenue to establish the appellant's intent for clandestine removal of goods. Citing relevant precedents, the tribunal concluded that Rule 25 provisions were not met, leading to the decision that goods were not liable for confiscation. Consequently, redemption fine and penalty were deemed not imposable on the appellant, and penalties under Rule 26 were also ruled out. The appeals were disposed of in favor of the appellant with consequential relief granted.