2007 (4) TMI 82 - AT - Central Excise

Confiscation and penalty - Alleged that appellant had confiscated the good(MS waste and scrape) and accordingly fine and penalty imposed - Held that allegation was not correct and fine and penalty not sustainable

Summary

Issues: Confiscation of MS waste and scrap, imposition of redemption fine and penalty, non-entry in RG 23D register, effect of non-entries on Modvat credit, justification for confiscation and penalty

In the judgment by the Appellate Tribunal CESTAT, Ahmedabad, the appellant, a registered dealer, had MS waste and scrap confiscated with an option for redemption by paying a fine of Rs. 2.40 lakhs and a penalty of Rs. 50,000. The confiscation was based on the non-entry of MS scrap received from a supplier in the RG 23D register, as required by Rule 57GG(3). The appellant argued that they verify goods before entry, sometimes causing delays in registering them in the RG 23D account.

The Commissioner (Appeals) acknowledged in Paragraph 8 that the appellant had validly obtained scrap from a supplier, M/s. Mahindra Ugine. However, concerns were raised about the possibility of substitution of usable scrap obtained from another source, which could lead to mischief. Despite this, no concrete evidence was found to support the charge, except for the non-entry in the RG 23D register as per Rule 57GG(3).

The judgment delved into the significance of entering goods in the RG 23D register for issuing modvatable invoices and availing Modvat credit. Non-entry could prevent the issuance of modvatable invoices, affecting customers' ability to claim credit for duty paid on the input. The judgment highlighted that failure to enter goods in the register does not inherently prejudice the Revenue's interests, especially if dealing with non-modvatable inputs. It emphasized that non-entry due to factors like receiving goods from duty-exempt manufacturers does not constitute an offense warranting confiscation or penalties.

Ultimately, the Tribunal found no justification for the confiscation of goods or the imposition of penalties on the appellant. The decision set aside the confiscation and penalties, allowing the appeal with consequential relief to the appellant. The judgment concluded with the pronouncement in court, providing clarity on the legal outcome of the case.