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2010 (10) TMI 885 - AT - Central ExciseConfiscation and penalty - Non-accountal of goods - Goods were lying in the factory and non-entry in the statutory record Held that - Following the decisions of Ronak Laminex (P) Ltd. (2007 (8) TMI 607 - CESTAT, AHMEDABAD) and Amrut Ceremics (2006 (12) TMI 32 - CESTAT, AHMEDABAD) it is to be held that in this case also, the confiscation and penalty is not warranted under Rule 25 of Central Excise Rules 2002. Hence the impugned order for confiscation and imposition of penalty under Rule 25 is set aside. But as submitted by the learned Advocate, it is a procedural lapse of the Central Excise provision. Hence, the penalty under Rule 27 can be imposed. Accordingly, penalty under Rule 27 is imposed to Rs. 2,000/-, the appeals filed (by the Revenue and assessee) are disposed of and the cross objections are also disposed of in the above manner.
Issues:
Confiscation and penalty under Rule 25 of Central Excise Rules, 2002 - Reduction of penalty by Commissioner (Appeals) - Allegation of procedural lapse - Application of Section 11AC of the Act - Discretion in quantifying penalty - Confiscation without proof of mala fide intention. Detailed Analysis: 1. Confiscation and Penalty under Rule 25 of Central Excise Rules, 2002: During a visit to the factory premises, 90 pieces of 250 NB CI Sleeve Coupling were found in excess on physical verification, not accounted for in the daily stock register. The goods were confiscated and a penalty was imposed under Rule 25. The Commissioner (Appeals) confirmed the confiscation but reduced the penalty. Both the Revenue and the assessee appealed against the decision. 2. Reduction of Penalty by Commissioner (Appeals): The Assessee argued that the excess goods were not entered due to a mistake by the dealing clerk, without any mala fide intention to evade duty. The Revenue contended that mala fide intention is not required for confiscation and penalty under Rule 25. Reference was made to the case of UOI v. Dharamendra Textile Processors, emphasizing that mens rea is not essential for penalty under Section 11AC. 3. Allegation of Procedural Lapse and Application of Section 11AC: The Tribunal analyzed Rule 25 and Section 11AC, noting that confiscation and penalty can be imposed if there is fraud, collusion, willful misstatement, or intent to evade duty. The Tribunal distinguished the case from Dharamendra Textile Processors, clarifying that mandatory penalty applies only in cases of fraud with intent to evade duty. 4. Discretion in Quantifying Penalty and Confiscation without Proof of Mala Fide Intention: Citing precedents like CCE v. Ronak Laminex (P) Ltd. and Amrut Ceramics, the Tribunal held that non-accountal of goods without proof of mala fide intention does not warrant confiscation. In this case, as there was no intention to evade duty, confiscation and penalty under Rule 25 were set aside. However, a penalty under Rule 27 for procedural lapse was imposed. 5. Conclusion: The Tribunal disposed of the appeals and cross-objections, setting aside the confiscation and penalty under Rule 25 but imposing a penalty under Rule 27 for procedural lapse. The decision emphasized the importance of proving intent to evade duty for confiscation and penalty under the Central Excise Rules, highlighting the distinction between procedural lapses and deliberate evasion.
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