2012 (9) TMI 273 - AT - Central Excise

Bond alleged that unit had executed a bond while obtaining ware-housing licence and contending that these bonds should have been enforced for confiscation and recovery of redemption fine imposable against these goods Held that - Goods can be confiscated only if the same are available for confiscation - goods were never seized neither available for seizure. If the goods are not seized, the question of confiscation of such goods does not arise and consequently there is no question of imposing redemption fine to release these goods Enforcing bond - unit had executed G-17 bond and all liabilities against 100% EOU are being covered by this bond - unit had executed a bond while obtaining warehousing licence and to manufacture for working as EOU Held that - No bond was executed for release of the goods confiscated and no redemption fine was imposed on release. Therefore, there is no question of enforcing any bond - The purpose of executing bond under Sections 58 & 65 of Customs Act, 1962 is entirely different. Needless to say that there is distinction between a bond executed for working as EOU and a bond executed for provisional release of seized goods. - Revenue s appeal is rejected.

Summary

Issues: Appeal against rejection of department's appeal regarding confiscation and recovery of redemption fine for diverted duty-free inputs.

Analysis:
1. The appeal was filed by the Revenue against the order of Commissioner (Appeals) rejecting the department's appeal. The case involved M/s. Millat Fibres, Surat, alleged to have diverted duty-free inputs. While appropriate Customs duty was confirmed with a penalty, 6000 kgs of imported PFY, illicitly cleared/diverted, were not confiscated by the adjudicating authority. The main ground of appeal was that the unit had executed a bond while obtaining warehousing license, contending that these bonds should have been enforced for confiscation and recovery of redemption fine. The Commissioner (Appeals) rejected the appeal, stating that goods can only be confiscated if available for confiscation, citing the judgment in the case of Weston Components Ltd. v. C.C., New Delhi.

2. The Revenue's main contention was that the assessee, under bond while obtaining re-warehousing license and license to manufacture, had undertaken to observe all provisions of Customs Act, 1962, and Central Excise Act, 1944. The Revenue relied on the Supreme Court's judgment, arguing that goods can be confiscated even if not physically available. The key issue was whether goods can be confiscated if not seized. The judgment clarified that only seized goods are liable for confiscation, and redemption fine can be imposed in lieu of confiscation. Since the goods in question were neither seized nor available for seizure, confiscation and redemption fine were deemed inapplicable.

3. Regarding the enforcement of the bond, the Revenue claimed that the unit had executed a G-17 bond covering all liabilities against the 100% EOU. However, it was found that no bond was executed for the release of confiscated goods, and no redemption fine was imposed upon release. The purpose of the bond under Customs Act, 1962 differed for working as an EOU and for the provisional release of seized goods. The Tribunal agreed with the Commissioner (Appeals) in rejecting the department's appeal, emphasizing the distinction between the types of bonds executed.

4. In conclusion, the Tribunal rejected the Revenue's appeal after considering the arguments presented and the legal provisions governing the confiscation and recovery of redemption fine in cases involving diverted duty-free inputs.