2016 (1) TMI 1261 - AT - Central Excise

Whether the goods can be confiscated and penalty can be imposed under Rule 25 ibid from a person who is not categorized u/r 25 of the Rules for accomplishing the purpose? Whether penalty can be imposed u/r 26, when the confiscation is not proper and justified? Held that - On perusal of Rule 25 ibid, it reveals that the provisions contained therein can be invoked against the persons namely, producer, manufacturer, registered person of warehouse, registered dealer - the appellant No.2 is not confirming to any of the category of persons mentioned in the said rule. Thus, the provisions of Rule 25 cannot be invoked against appellant No.2 for confiscation of goods. Rule 26 of the said rules also cannot be invoked for imposition of penalty in view of the fact that the goods were not liable for confiscation u/r 25 of the said rules. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against order upholding confiscation of seized goods and penalty imposition.

Analysis:
The case involved M/s. Taneja Iron and Steel Pvt. Ltd. and M/s. Taneja Brothers, where goods valued at Rs. 25,44,508 were seized from the shop of the latter. Show cause notices were issued proposing confiscation and penalties under Central Excise Rules. The Order-in-Original confiscated goods with an option to redeem on payment of fine and imposed penalties on both appellants. The Commissioner (Appeals) upheld the order, leading to the present appeals before the Tribunal.

The appellant's counsel argued that Rule 25 cannot be applied to the appellant No.2 as they do not fall under the specified categories, citing relevant case laws. The respondent's representative contended that since goods were seized from appellant No.2's premises, confiscation and penalties were justified, supported by tribunal decisions and a Madras High Court judgment.

The Tribunal analyzed Rules 25 and 26 of the Central Excise Rules 2002 to determine the legality of confiscation and penalties. It was observed that Rule 25 could not be invoked against appellant No.2 as they did not fit the defined categories. Referring to the Delhi High Court judgment in Balaji Trading Company, the Tribunal emphasized that penalties can only be imposed on the specified persons under Rule 25. The Tribunal also cited a Supreme Court case emphasizing the necessity of specifying contraventions in show cause notices.

The Tribunal distinguished the cases cited by the respondent's representative, highlighting the differences in circumstances. Ultimately, the Tribunal concluded that the confiscation of goods and penalties imposed were not justified as per Rule 25 and Rule 26. Consequently, the appeals filed by the appellants were allowed, overturning the impugned order.