2011 (1) TMI 273 - AT - Central Excise

Search and seizure - excess stock found - physical possession was not taken by the department - respondents have failed to maintain proper account and further they disposed of the seized goods without permission - order of the original authority holding that the goods are liable for confiscation has to be upheld - penalty imposed is reduced - appeal disposed of

Summary

Issues:
1. Appeal by the department against the Commissioner (Appeals) order.
2. Confiscation of excess stock of molasses, redemption fine, and penalty imposition.
3. Dispute over the liability for confiscation of goods.
4. Failure to seek provisional release before clearing seized goods.
5. Maintenance of proper accounts and disposal of seized goods without permission.

Analysis:
1. The appeal was filed by the department against the Commissioner (Appeals) order regarding the confiscation of excess stock of molasses. The original authority had confiscated the excess stock of molasses, imposed a fine, and penalty under Rule 25 of Central Excise Rules, 2002. The Commissioner (Appeals) set aside the original authority's order considering that the excess goods were subsequently cleared by the respondents on payment of duty, even though they were held liable for confiscation at the time of the order.

2. The department argued that the excess goods were admitted by the respondents and cleared without seeking provisional release, making them liable for confiscation. The Commissioner (Appeals) setting aside the redemption fine and penalty was contested by the department due to the clearance of excess stock without permission.

3. The respondents contended that the excess stock of molasses was due to the volatile nature of the product and the losses during storage and handling. They claimed to have paid duty for the excess stock when clearing the goods, demonstrating their bonafide intention. The respondents also mentioned instances where shortages were found, and they sought remission of duty. They sought the upholding of the Commissioner (Appeals) decision on setting aside the redemption fine and penalty.

4. The Tribunal observed that the excess stock was seized and entrusted to the respondents, who failed to seek provisional release before clearing the goods. The physical possession was not taken by the department due to administrative reasons. The Tribunal noted that the seized goods were handed over to the respondents, who did not produce the goods required at the time of adjudication. The Tribunal disagreed with the reasoning of the Commissioner (Appeals) regarding the clearance of seized goods and upheld the liability for confiscation.

5. Considering the failure of the respondents to maintain proper accounts and disposing of seized goods without permission, the Tribunal upheld the original authority's decision on the liability for confiscation and imposed a reduced redemption fine and penalty. The Tribunal restored the original authority's order, reducing the redemption fine and penalty amounts.