2010 (9) TMI 335 - AT - Central Excise

Penalty - Failure to maintain accounts of goods manufactured and cleared - penal provision under Rule 25(1)(b) of the Central Excise Rules, 2002 - claim that some records were taken away by the officers of DGCEI without proper inventory - appellants claimed that the RG-I has been taken away by DGCEI have produced copies of RG-I register along with reply to the show-cause notice - respondents have clearly failed in maintaining the proper records relating to the raw materials received by them and issued by them as well as records of finished goods manufactured and cleared - original authority erred in presuming that the unaccounted goods were meant for removal without payment of duty - no evidence relied upon regarding any clandestine removal by the party - Order of the Commissioner (Appeals) is set aside and order of the original authority restored - redemption fine imposed is reduced from Rs. 5.00 lakhs to Rs. 2.5 lakhs

Summary

Issues: Appeal against order of Commissioner (Appeals) regarding confiscation of goods and penalty imposed for irregular maintenance of records.

Analysis:
1. Confiscation of Goods:
The case involved the department appealing against the Commissioner (Appeals) order regarding the confiscation of goods valued at Rs. 58,11,850 due to irregularities in maintaining records. The officers found discrepancies in stock during a visit to the factory premises. The original authority confiscated the goods for lack of proper records but allowed redemption upon payment of a fine. The Commissioner (Appeals) set aside the confiscation order, stating that the respondents provided sufficient evidence to verify the stock as per sale and purchase documents. However, the Tribunal disagreed, noting discrepancies between the closing balance and stock found on the visit. The Tribunal held that the respondents failed to maintain proper records of raw materials and finished goods, attracting penalties under Rule 25 of the Central Excise Rules.

2. Penalty Imposed:
The department argued that the respondents did not maintain RG-I records and failed to produce them during the officers' visit. They claimed that the officers seized documents in the presence of witnesses and company officials, contradicting the respondents' submission. The department contended that irregular maintenance of records regarding raw materials and finished goods was established. On the other hand, the respondent's advocate asserted that they filed necessary returns and produced copies of documents like RG-I registers and RG-23A Part-I, showing proper accounting for the goods found. The Tribunal found that the respondents' failure to maintain accurate records from August 1, 2003, to August 23, 2003, warranted confiscation of the goods and upheld the penalty imposed by the original authority.

3. Presumption of Duty Evasion:
While acknowledging the irregularities in record-keeping, the Tribunal noted that the original authority erred in presuming that unaccounted goods were intended for removal without payment of duty. The seized goods included finished goods, raw materials, and in-process materials, with no evidence of clandestine removal before the visit. The Tribunal held that the presumption of duty evasion was unwarranted and that Section 11AC was not applicable. Consequently, the Tribunal set aside the Commissioner (Appeals) order, reinstated the original authority's decision on confiscation, and reduced the redemption fine and penalty imposed.

In conclusion, the Tribunal upheld the confiscation of goods and penalties due to the respondent's failure to maintain proper records, while also clarifying that the presumption of duty evasion was unfounded. The decision highlights the importance of accurate record-keeping in compliance with Central Excise Rules to avoid penalties and confiscation of goods.