2018 (12) TMI 1784 - AT - Central Excise

Marketability/excisability - Copper slag - requirement for accounting in terms of Rule 10 of Central Excise Rules - Confiscation - penalty - HELD THAT - Revenue has not established that copper slag is marketable and further they have not identified the tariff entry or sub heading under which copper slag is dutiable. Thus, this finding of the adjudicating authority are vague and misconceived - appellant was not required to maintain the entry of copper slag as required under Rule 10 of the Central Excise Rules, 2002 - Appeal allowed - decided in favor of appellant.

Issues involved:
1. Confiscation of copper slag and copper scrap by the Additional Director General, DGGST Intelligence.
2. Imposition of penalties on the appellant company and its directors under the Central Excise Rules.
3. Alleged inadmissible cenvat credit passed on to manufacturers.
4. Contravention of Rule 10 and Rule 12 of the Central Excise Rules, 2002.
5. Requirement of maintaining proper records and monthly returns by the assessee.
6. Appeal against the impugned order-in-original regarding confiscation and penalties.

Detailed Analysis:
1. The judgment addresses the confiscation of 300 MT of copper slag and 40 MT of copper scrap by the Additional Director General, DGGST Intelligence. The order also imposed penalties on the appellant company and its directors under Rule 25 of the Central Excise Rules. The issue arose from specific information received regarding inadmissible cenvat credit passed on to manufacturers, leading to seizures during searches at the factory and godown of the appellant. The appellant contested the confiscation and penalties, arguing that the copper slag was meant for recycling and not for sale, thus not requiring separate accounting as per Rule 10. The Tribunal found that the Revenue failed to establish the marketability of copper slag, leading to the appeals being allowed and the impugned order set aside.

2. The judgment delves into the alleged contravention of Rule 10 and Rule 12 of the Central Excise Rules, 2002 by the appellant company. Rule 10 mandates the maintenance of proper records on a daily basis, while Rule 12 requires the submission of monthly returns by the assessee. The Revenue contended that the appellant breached these provisions, justifying the confiscation of goods and imposition of penalties. However, the Tribunal ruled in favor of the appellant, stating that the Revenue did not prove the marketability of the seized goods, thereby dismissing the allegations and allowing the appeals.

3. The issue of passing inadmissible cenvat credit to manufacturers was raised based on information received regarding certain entities engaging in such practices. The searches conducted revealed incriminating documents and statements indicating the passing of cenvat credit without corresponding material supply. The Tribunal's analysis primarily focused on the lack of evidence supporting the allegations, leading to the dismissal of the penalties and confiscation.

4. The judgment emphasized the importance of maintaining proper records and submitting monthly returns as per the Central Excise Rules. The appellant's compliance with these rules was a key argument in contesting the confiscation and penalties imposed. The Tribunal's decision to set aside the impugned order was influenced by the lack of evidence establishing the appellant's non-compliance with Rule 10 and Rule 12.

5. The legal battle also revolved around the interpretation and application of Rule 25 of the Central Excise Rules, 2002 concerning confiscation and penalties. The appellant challenged the basis of the penalties and confiscation, citing precedents and legal provisions to support their case. The Tribunal's detailed analysis highlighted the lack of substantiated claims by the Revenue, leading to the dismissal of the penalties and confiscation orders.

In conclusion, the judgment extensively covered the issues related to confiscation, penalties, cenvat credit, contravention of rules, and the legal interpretations governing the Central Excise Rules. The detailed analysis provided insights into the arguments presented by both parties and the Tribunal's rationale for allowing the appeals and setting aside the impugned order.

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