2012 (7) TMI 677 - AT - Central Excise

Confiscation of excess stock seized - appellants engaged in the manufacture of MS bars, angles and channels etc - modvat credit not taken on the said inputs - Held that - It is seen that the appellant had not taken any modvat credit on the said inputs. As such, invokation of provisions of Rule 15(1) of Cenvat Credit Rules was not justified. Otherwise also, excess found raw materials cannot be confiscated. Consequently, confiscation of the seized ingots as also imposition of penalty upon the appellant is set aside - Decided in favor of assessee.

Summary

Issues: Redemption fine and penalty imposed on the appellant for excess MS ingots found during a surprise visit to the factory.

Analysis:
1. Redemption Fine and Penalty Imposed:
The appeal challenges the redemption fine of Rs.50,000/- and penalty of Rs.50,000/- imposed on the appellant due to the excess MS ingots found during a surprise visit to the factory. The appellant, engaged in the manufacture of MS bars, angles, and channels, had not taken any modvat credit on the inputs. The officers seized the excess ingots, leading to proceedings for confiscation and penalty imposition.

2. Legal Issue and Precedents:
The Tribunal analyzed the legal issue and referred to precedents to support its decision. It was noted that excess raw materials cannot be confiscated when they are not modvatable, and no credit entries were made. Citing decisions like CCE, Surat II vs. Narmada Fabrics P. Ltd. and Raipur Bright Steel & Wire Weld Inds. Ltd. vs. CCE, Raipur, the Tribunal established that confiscation with redemption fine and penalty is not justified when raw materials are not modvatable and no credit entries were recorded.

3. Decision and Relief Granted:
Based on the legal precedents and the specific circumstances of the case, the Tribunal set aside the confiscation of the seized ingots and the imposition of the penalty on the appellant. The appeal was allowed, providing consequential relief to the appellant. The judgment was pronounced in open court, thereby concluding the matter in favor of the appellant.

This detailed analysis of the judgment highlights the legal issues, the Tribunal's reasoning based on precedents, and the final decision granting relief to the appellant regarding the redemption fine and penalty imposed for the excess MS ingots found during the surprise visit to the factory.