2013 (12) TMI 169 - AT - Central Excise

Confiscation of goods under Rule 25 of CE Rules 2002 Whether confiscation can be ordered when goods are already cleared and have to be treated as clandestinely removed only because of default and delay in payment of duty - Held that - Confiscation of goods would mean that propriety of the goods shall rest with the Government and therefore if goods for confiscation are not available, redemption fine in lieu of confiscation cannot be imposed Following Shiv Kripa Ispat Put. Lid V/s C.C.E., Nasik 2009 (1) TMI 124 - CESTAT MUMBAI - fine was not imposable when goods were allowed to be cleared - there was not any merit in the appeal and accordingly reject the same - if the fine is paid, the goods have to be returned - it is nobody s case that if the respondent pays redemption fine the goods will be returned by the Revenue - if the goods have been seized and released provisionally after execution of bond confiscation order can be made and fine can be imposed but not otherwise the order operating the confiscation and the redemption fine imposed in lieu of confiscation is unsustainable Decided in favour of Assessee.

Summary

Issues:
- Failure to discharge Central Excise duty within stipulated time
- Show cause notice for recovery of duty and confiscation of goods
- Confirmation of demands, penalties, and confiscation by Adjudicating Authority
- Appeal against penalties and confiscation
- Interpretation of Rule 8 of Central Excise Rules, 2002 regarding confiscation of goods

Analysis:
The appeal in this case was against an Order-in-Appeal that confirmed demands for Central Excise duty not discharged within the required timeframe. The appellant faced a show cause notice for recovery of duty and proposed confiscation of goods cleared during specific dates. The Adjudicating Authority upheld the demands, penalties, and ordered confiscation of goods with a redemption fine. The First Appellate Authority set aside one penalty but imposed another, not granting relief on the confiscation. The main issue was whether the confiscation of goods cleared by the appellant for violating Rule 8 of Central Excise Rules, 2002 was justified.

The appellant argued that a similar issue was previously decided in favor of the assessee by a Larger Bench in another case. The departmental representative supported the lower authorities' findings. The judge examined both sides' submissions and records, focusing on the legality of confiscating goods already cleared by the appellant due to non-payment of duty within the specified period.

The judge referred to a previous case where it was held that confiscation of goods cannot be ordered when they have already been cleared and the default was only in payment. Confiscation implies the government's ownership of the goods, and if the goods are not available for confiscation, a redemption fine cannot be imposed. If the fine is paid, the goods should be returned. The judge found no merit in the department's appeal and rejected it based on the precedent set by the Larger Bench. Consequently, the order upholding confiscation and the redemption fine was deemed unsustainable, leading to the setting aside of those aspects of the impugned order and allowing the appeal.