2011 (6) TMI 346 - AT - Central Excise

Confiscation - boxes of ceramic glaze tiles were found in excess than the recorded ones - Held that - The said boxes were the production of the previous 24 hours and were yet to be entered in RG 1 register when the appellant s factory was visited by the officers. In as much as there is no other evidence on record indicating any malafide on the part of the assessee, he set aside the confiscation of the goods. However he upheld imposition of penalty of Rs.12,000/- on M/s. Hardwar Potteries for non maintenance of RG 1 register. Penalty on Shri Sanjay Narsibhai Patel was set aside in the absence of any charge of mensirea against him - The Revenue s appeals are accordingly rejected.

Summary

Issues:
Confiscation of excess ceramic glaze tiles, imposition of penalties, requirement of mens rea for confiscation.

Confiscation of Excess Ceramic Glaze Tiles:
The case involved the confiscation of 4,983 boxes of ceramic glaze tiles found in excess during a visit to the factory, which were seized by the officers. The original adjudicating authority had confiscated the goods and imposed penalties on the manufacturing unit and one of the partners. The Commissioner (Appeals) set aside the confiscation of the goods, noting that the excess boxes were the production of the previous day and were yet to be entered in the statutory register. The Tribunal upheld the Commissioner's decision, emphasizing that confiscating goods not recorded in the register without evidence of malafide would be unjust. The Tribunal concluded that if the excess goods were part of the day's production and there was no evidence to suggest non-compliance, confiscation would not be justified.

Imposition of Penalties:
While the penalty of Rs.12,000/- on the manufacturing unit was upheld for non-maintenance of the statutory register, the penalty on one of the partners was set aside due to the absence of mens rea charges against him. The Tribunal reiterated that mens rea was essential for imposing penalties, and since there was no evidence of wrongful intent on the partner's part, the penalty was revoked. This decision aligned with the principle that penalties should be imposed based on culpability and intent, not merely on technical violations.

Requirement of Mens Rea for Confiscation:
The Revenue contended that mens rea was not necessary for confiscating excess goods, arguing that since the tiles were not recorded in the register, confiscation was justified. However, the Tribunal disagreed, emphasizing that without evidence of deliberate wrongdoing or intent to evade compliance, confiscation solely based on the absence of immediate recording in the register would be unfair. The Tribunal's rejection of the Revenue's argument underscored the importance of considering intent and circumstances before confiscating goods, especially when no malafide actions were evident.

In conclusion, the Tribunal upheld the Commissioner (Appeals)' decision to set aside the confiscation of excess ceramic glaze tiles, emphasizing the importance of evidence of malafide and intent before confiscating goods. The Tribunal also revoked the penalty on one of the partners due to the absence of mens rea charges, highlighting the necessity of establishing wrongful intent for imposing penalties. The judgment reaffirmed the principle that confiscation and penalties should be based on culpability and intent, ensuring fairness and justice in enforcement actions.