2015 (9) TMI 347 - HC - Central Excise

Manufacture of polyester filament yarn - Penalty under Rule 173-Q - Imposition of redemption fine on seized goods - Held that - Buyer M/s. Vidhya Packaging Industries Pvt. Ltd. had returned the goods vide challan No. 133 on 4-6-1997, i.e., a day prior to the alleged inspection. The quantity shown in this challan prepared by M/s. Vidhya Packaging Industries Ltd. tallies with the quantity found during the inspection. Further, we find that due intimation of return of goods was intimated by the respondent to the department concerned, which has been admitted and accepted by the department. Consequently, we are of the opinion that the return of goods appears to be a genuine transaction and is not an afterthought. No evidence has been brought on record by the department to indicate that no such goods were returned by M/s. Vidhya Packaging Industries Ltd. to the respondents. - goods found in the godown of the respondents at the time of inspection were not unaccounted goods but were goods returned from the buyer. The Tribunal was justified in setting aside the order of confiscation and imposition of fine and penalty. We are of the opinion that no substantial question of law arises for consideration in the present appeal. - Decided against Revenue.

Summary

Issues:
- Central Excise Duty demand for excess stock of twisted yarn
- Imposition of penalty under Central Excise Rules
- Appeal against the order of confiscation and penalty
- Determination of unaccounted goods vs. goods returned from the buyer
- Justification of the Tribunal's decision

Central Excise Duty Demand and Penalty Imposition:
The respondents, engaged in manufacturing polyester filament yarn, faced a show cause notice due to an excess stock of twisted yarn found during an inspection against recorded balances. The authorities demanded Central Excise Duty and imposed a penalty under Rule 9(2) and Rule 173-Q of the Central Excise Rules, 1944. The order included confiscation of seized goods with an option for redemption upon payment of fines and duties.

Appeal Against Confiscation and Penalty:
The respondent appealed to the Commissioner (appeals) after being aggrieved by the order. Subsequently, a second appeal was filed before the Customs, Excise & Service Tax Appellate Tribunal, New Delhi. The Tribunal allowed the appeal, setting aside the original order, stating that the unaccounted goods in the godown were actually goods returned by the buyer, M/s. Vidhya Packaging Industries Pvt. Ltd.

Determination of Unaccounted Goods vs. Goods Returned:
The High Court analyzed the situation, noting that the goods found during the inspection matched the quantity returned by the buyer a day before the alleged inspection. The Court observed that the return of goods was a genuine transaction, supported by intimation to the concerned department. Lack of evidence from the department to refute the return of goods led to the conclusion that the goods were not unaccounted but were indeed returned items.

Justification of Tribunal's Decision:
After thorough review, the High Court upheld the Tribunal's decision, emphasizing that no substantial question of law arose for consideration. The Court dismissed the appeal, affirming that the goods found were not unaccounted but were returned from the buyer, thus justifying the setting aside of the order of confiscation and penalty imposition.

In conclusion, the High Court ruled in favor of the respondent, determining that the goods in question were not unaccounted for but were legitimately returned items. The judgment highlighted the importance of proper documentation and evidence in excise duty cases to differentiate between unaccounted goods and legitimate transactions.