2007 (8) TMI 168 - AT - Central Excise

Yarn (raw material) received by appellant without any invoices No discrepancy noticed at time of investigation Transaction of yarn as noticed by officer was genuine -Neither credit availed on the yarn not it was put under process during verification of stock Confiscation is unsustainable

Summary

Issues:
Challenge against order-in-appeal of the Commissioner (Appeals) | Allegation of clandestine processing and removal of goods | Confiscation of unaccounted yarn | Imposition of penalty under Rule 26 | Liability of suppliers for penal action under Rule 27 | Confiscation of excess raw material | Appeal against the order of the adjudicating authority

Analysis:

The case involved a challenge by the Revenue against the order-in-appeal of the Commissioner (Appeals) dated 28-7-2005. The respondent was engaged in processing/dyeing grey fabrics and yarn. During a visit to the factory premises, it was found that the respondent had received a quantity of grey acrylic yarn without proper documentation, leading to allegations of clandestine processing and removal of goods. The Revenue sought confiscation of the unaccounted yarn and imposition of a penalty under Rule 26 of the Central Excise Rules, 2002.

The respondent claimed ignorance about the acquisition of the stock initially, but later provided invoices for the yarn purchased from suppliers. The adjudicating authority held that the unaccounted yarn was liable for confiscation and imposed penalties. The suppliers were also held liable for penal action under Rule 27.

On appeal, the Appellate Commissioner considered the invoices provided by the respondent and found no discrepancies, leading to the decision that confiscation of the goods was not warranted. The Commissioner (Appeals) upheld this decision, emphasizing that the excess raw material was properly documented and accounted for, hence no confiscation was justified. The reliance on a previous Tribunal decision was deemed misconceived as the present case involved accounted-for stock.

Ultimately, the Appellate Tribunal dismissed all appeals, affirming the decision of the Commissioner (Appeals) based on the relevant material on record and valid reasons. The judgment highlighted the importance of proper documentation and accounting practices in determining the liability for confiscation of goods under the Central Excise Rules, 2002.