2007 (2) TMI 143 - AT - Central Excise

Confiscation As per rule 25 and High Court decision unaccounted goods found in the factory, ready to dispatch are liable to confiscation Assessee s plea that goods are still in factory and will be entered in RG1 record after inspection is rejectable

Summary

Issues: Confiscation of unaccounted goods under Central Excise Rules, applicability of Rule 25, comparison with Rule 173Q, entry of goods in RG 1 record, practice of inspection, imposition of redemption fine and penalty

In this case, the issue revolved around the confiscation of unaccounted goods found in a factory, which were fully packed and ready to dispatch. The adjudicating authority had initially ordered the confiscation of the goods under Rule 25 of the Central Excise Rules, along with imposing a redemption fine and penalty. On appeal, the Commissioner (Appeals) set aside the confiscation order, citing lack of proof regarding clandestine removal but confirmed that the goods were not entered in the RG 1 record, reducing the penalty amount. The Revenue contended that as per the proviso to Rule 25, unaccounted goods are liable for confiscation, referencing a decision by the Hon'ble Bombay High Court in a similar case. The respondents argued that the goods were still in the factory awaiting inspection before being entered into records.

The Tribunal noted that the goods in question were indeed not entered in the RG 1 record, and the only defense provided was that they were pending inspection. However, no evidence was presented to support this claim. Drawing parallels between Rule 25 of the Central Excise Rules and Rule 173-Q, the Tribunal referred to the Bombay High Court's decision in a previous case, which held that unaccounted goods found in a factory are subject to confiscation. Consequently, the Tribunal set aside the earlier order that had annulled the confiscation and reinstated the adjudicating authority's decision to confiscate the goods. To balance the circumstances, the redemption fine was increased, but the penalty remained unchanged. The appeal was allowed in favor of the Revenue, upholding the confiscation of the unaccounted goods.

This judgment clarifies the legal principles surrounding the confiscation of unaccounted goods under the Central Excise Rules, emphasizing the importance of maintaining accurate records and complying with statutory provisions. The decision underscores the significance of proving compliance with regulations and the consequences of failing to do so, as demonstrated by the restoration of the confiscation order in this case.