2013 (12) TMI 756 - AT - Central Excise

Motor Vehicle Parts being not exempted bearing the brand name of others found and seized No registration taken - SSI exemption availed as the clearances were within the Exemption limit Held that - The appellant in addition to manufacture the goods of their own brand, were also manufacturing the goods bearing the brand name of other persons and as such in respect of the goods bearing the brand name of other persons, the SSI exemption was not available - The moment, to Appellant started manufacture of goods bearing the brand name of other person, which were liable to duty, they should have obtained Central Excise registration and started observing not Central Excise formalities - But the Appellant had neither obtained registration nor were observing any Central Excise formalities - the order upholding the confiscation of the seized goods and imposition of penalty is correct - the quantum of the redemption fine and the penalty which is equal to the assessable value of the goods, is on much higher side - the redemption fine is reduced and the penalty under Rule 25 is reduced - Decided partly in favour of Assessee.

Summary

Issues:
Manufacture of goods under SSI exemption, confiscation of seized goods bearing other brand name, imposition of penalty, reduction of redemption fine and penalty.

Manufacture of Goods under SSI Exemption:
The Appellant, engaged in manufacturing motor vehicle parts under SSI exemption, were found manufacturing goods bearing other brand names not eligible for exemption. Central Excise Officers seized such goods valued at Rs. 3.33 lakh. The Deputy Commissioner ordered confiscation, redemption fine of Rs. 75,000, and penalty equal to the value of goods. The Commissioner (Appeals) upheld confiscation but reduced the fine to Rs. 52,500 and penalty to Rs. 2,10,023. The Appellant argued no intention to evade duty as duty payable only on clearance, citing a Tribunal judgment. The Revenue contended non-compliance with Central Excise rules justified confiscation and penalty.

Confiscation of Seized Goods and Imposition of Penalty:
The Tribunal noted the Appellant failed to obtain Central Excise registration or comply with formalities when manufacturing goods bearing other brand names. While SSI exemption did not apply to such goods, the Appellant did not fulfill legal requirements. Thus, the Tribunal upheld confiscation and penalty. However, considering the circumstances, the Tribunal deemed the redemption fine and penalty excessive. The redemption fine was reduced to Rs. 20,000, and the penalty under Rule 25 was reduced to Rs. 15,000.

This judgment clarifies the obligations of manufacturers under SSI exemption and the consequences of non-compliance with Central Excise rules. It underscores the importance of maintaining proper registration and adherence to legal formalities when manufacturing goods not covered by exemption provisions. The Tribunal's decision balances enforcement with fairness by reducing excessive fines and penalties while upholding the confiscation of goods manufactured in violation of excise regulations.