2012 (6) TMI 426 - AT - Central Excise

Confiscation - redemption fine and penalty - Assembly of cars - assembly of car from the component parts amounts to manufacture under Section 2(f) of the Central Excise of the Act and excise duty is liable to be charged on such assembly Held that - Once a manufacturing activity is undertaken for manufacture of excisable goods, the manufacturer is required to obtain a licence from the Central Excise department under Rule 174 of the Central Excise Rules and if any manufacturing activity is undertaken without a licence from the department, there is a contravention of the Central Excise Rules and the excisable goods so manufactured are liable for confiscation under Ruled 173Q(1)(c) as existing at that time. Section 11AC was not in existence at the time of this manufacturing activity undertaken by the appellant. Therefore, the absence of the condition of Section 11AC will not have any effect on the confiscation of the goods. Order of confiscation of the impugned cars and the consequential imposition of redemption fine and penalty upheld.

Summary

Issues:
Whether the order of confiscation of the impugned car and imposition of redemption fine and penalty on the appellant is correct.

Analysis:
The appellant, a graduate from Tokyo University, engaged in assembling cars without power, using imported and indigenous parts. The appellant sought clarification from the Central Excise authorities regarding excise duty on selling these cars, supported by a legal opinion stating this activity did not constitute manufacture. The appellant argued no intention to evade duty, citing relevant case law emphasizing mens rea and bonafide belief.

The Revenue contended that the appellant's activity amounted to manufacture, requiring a license under Rule 174 of the Central Excise Rules. As the appellant did not obtain a license, the goods were liable for confiscation under Rule 173Q(1)(c) for engaging in manufacturing without the required license, despite the absence of Section 11AC during that period.

The Tribunal held that assembling cars constituted manufacture under Section 2(f) of the Central Excise Act, necessitating a license. The absence of Section 11AC did not affect the confiscation under Rule 173Q(1)(c). The Tribunal rejected the appellant's arguments based on relevant case law, emphasizing the mandatory nature of penalty and confiscation under the rule.

The Tribunal, concurring with the Member (Technical), upheld the order of confiscation, redemption fine, and penalty. The appeal papers were to be returned for further action based on the decision.

In the majority order, the Tribunal upheld the confiscation of the cars and imposition of fine and penalty as per the Member (Technical)'s decision.