2013 (6) TMI 505 - AT - Central Excise

Clandestine removal - issue of mis-classification and clearance of goods by availing wrong exemption is the matter involved in separate proceedings - manufacture of Garoil-A, B, C, D, E, F and L - Held that - Even if the goods were wrongly classified, if they have been accounted for in RG-1 register, whether they can be seized on the presumption that they would also be cleared without payment of duty, may not be correct. Further, sample of goods was sent for testing and whether the dispute in technical in nature or there was a deliberate intention to evade duty, has to be considered. Under these circumstances and in view of the submission that the goods have been used for manufacture of other goods which were cleared on payment of duty, they have been entered in to RG-1 register in the first place, pre deposit waived - full stay granted.

Summary

Issues: Misclassification of goods, duty evasion, confiscation, penalty imposition, waiver of pre-deposit, stay against recovery

In this case, the appellant, engaged in the manufacture of excisable goods, was found to have manufactured final products from Commingled Crude Oil procured from a supplier and cleared them without payment of duty. The Central Excise Officers seized a significant quantity of the final products, suspecting duty evasion. The appellant was issued a show cause notice for demand of duty, interest, redemption fine, and penalties. The adjudicating authority confirmed the demand and imposed penalties. The appeal against this order was rejected, leading the appellant to seek waiver of pre-deposit and a stay against the recovery of dues.

The primary issue in this case revolved around the misclassification of goods and the clearance of products without payment of duty. The appellant argued that the goods were properly accounted for in the RG-1 register and were subsequently used in the manufacture of other goods, which were cleared after payment of duty. The appellant contended that the seizure of the goods was based on the assumption that they would be cleared without duty payment, despite being properly recorded in the register.

Upon hearing both sides and examining the records, the judge acknowledged the appellant's argument. The judge noted that even if there was a misclassification of goods, seizing them based on the presumption of duty evasion might not be justified if the goods were properly accounted for. The judge also considered the technical nature of the dispute and whether there was a deliberate intention to evade duty. Given that the goods were used in the manufacture of dutiable products, entered in the RG-1 register, and the existence of a prima facie case for waiver of pre-deposit, the judge granted the waiver and stayed the recovery during the appeal process. The stay application and the request for pre-deposit were both allowed, providing relief to the appellant during the appeal proceedings.