2013 (8) TMI 426 - AT - Central Excise

Clandestine removal Confiscation of goods - Goods were found without entry in the RG-I register - Held that - Except for finding that the goods were lying in the factory, there is neither any material to show that there was intention to evade duty, on the contrary, the evidence that has come on record only indicates that the goods were not subjected to quality control test and they were kept on hold, they were to be cleared by the quality control department and only thereafter were to be sent to the packing department after the quality control test was concluded - Revenue, in the present case has not acted in a reasonable manner in the matter of enforcing the penal clause against the petitioner. Enforcement of penal clause has to be done subject to strict proof of intention to evade payment of duty. In the present case, neither intention to evade duty is established nor is there any material to establish the same and on the contrary the explanation of the petitioners and the fact that the material was not subjected to quality control test has been totally ignored. Merely because in the statement, the Commercial Manager of the petitioners has stated that the goods were manufactured that by itself cannot be a ground for holding that the goods were ready for despatch to the customer - The confiscation of the goods ordered by the lower authorities is liable to be set aside - Question of imposing penalty either on the appellant-assessee or its partner does not arise Decided in favor of Assessee.

Summary

Issues involved:
Appeal against non-confirmation of penalty, confiscation of seized goods, reduction of penalties, reversal of CENVAT Credit, imposition of penalties, confiscation of unaccounted goods.

Analysis:
1. The appeal involved multiple issues arising from the same impugned order. The appellant, a Central Excise registered unit, faced charges related to excess stock, availing excess CENVAT Credit, and confiscation of seized goods with penalties imposed by the adjudicating authority.
2. The first appellate authority reduced penalties and redemption fine but upheld non-eligible CENVAT Credit and confiscation of unaccounted goods, leading to the subsequent appeals.
3. The appellant's counsel argued that unrecorded goods were awaiting quality control clearance, not for clandestine purposes, citing a relevant judgment and claiming inadvertent error in availing CENVAT Credit.
4. The Departmental Representative contended that penalties should be imposed for wrongly availed CENVAT Credit due to the duty paid unit's duty awareness.
5. The issue of confiscation hinged on whether unaccounted goods were intended for duty evasion, with the Departmental Representative invoking Rule 25(1)(b) and a Tribunal decision.
6. The judge considered both parties' submissions and evidence, emphasizing the partner's statement on goods awaiting quality control clearance and the proper accounting of raw materials and finished goods in private records.
7. Referring to a High Court judgment, the judge concluded that there was no intention to evade duty, as the goods were held for quality control tests, not for clandestine clearance, leading to the setting aside of confiscation.
8. Consequently, since the confiscation was annulled, penalties on the appellant and its partner were also set aside, and the impugned order upholding penalties and confiscation was overturned with consequential relief.

This detailed analysis covers the various legal issues, arguments presented, relevant case laws cited, and the judge's reasoning leading to the final decision on each aspect of the appeal.