2012 (9) TMI 878 - AT - Central Excise

Confiscation of goods - Imposition of redemption fine - Held that - Revenue is silent about the respondent s submission of the factory being closed for many days and the goods being in unpacked condition. Further, it is not the Revenue s case that the respondent was required to pay any duty on the said goods. The assessee was admittedly a small scale unit availing the benefit of small scale exemption notification. In this scenario I am of the view that the change of excess goods cannot be pressed onto service for imposition of penalty. No infirmity can be found in the impugned order of Commissioner (Appeals) - Decided against Revenue.

Summary

Issues:
1. Confiscation of goods and imposition of penalty based on excess goods found during a factory visit.
2. Dispute regarding the intention to evade duty and the burden of proof on the department.
3. Applicability of Rule 25(1)(b) and imposition of penalty for contravention of Rule 10.

Analysis:

Issue 1: Confiscation of goods and imposition of penalty
The case involves the Revenue appealing against the order of the Commissioner (Appeals) regarding the confiscation of goods and imposition of penalty on the appellant, a manufacturer of glassware. During a factory visit, 10,001 pieces of glass Refills silver coated for vacuum flasks were found over and above the recorded book balance, leading to the initiation of proceedings for confiscation and penalty. The original adjudicating authority confiscated the goods with an option for redemption on payment of a fine and imposed a penalty. The appellant contended that the factory was closed due to a festival, and the goods were not packed or entered in records. They argued that being a small-scale unit below the exemption limit, there was no motive to clear goods without duty payment.

Issue 2: Dispute on intention to evade duty and burden of proof
The Commissioner (Appeals) set aside the original order, noting that the department failed to prove the charge of clandestine removal or intention to evade duty with concrete evidence. Citing precedent, the Commissioner emphasized that the burden of proving clandestine removal lies on the department, requiring positive evidence. Mere non-accountal of goods, especially when not liable to duty and lacking any attempt for clandestine removal, does not justify confiscation. The Commissioner found no preparation for clandestine removal and ruled against confiscation, stating that the department did not discharge the burden of proof.

Issue 3: Applicability of Rule 25(1)(b) and penalty imposition
The Revenue argued that penalty under Rule 25(1)(b) was warranted due to a contravention of Rule 10, without requiring intent to evade duty. However, the Tribunal rejected the appeal, considering the factory closure, unpacked goods, and the small-scale unit's exemption status. Since no duty was payable on the goods and there was no attempt at clandestine removal, the excess goods could not be a basis for penalty imposition. The Tribunal upheld the Commissioner's decision, emphasizing that the circumstances did not warrant penalty imposition.

In conclusion, the Tribunal rejected the Revenue's appeal, upholding the Commissioner's decision to set aside the confiscation and penalty, highlighting the lack of evidence for clandestine removal, the small-scale unit's status, and the absence of duty liability on the goods.