2019 (2) TMI 1859 - AT - Central Excise

Principles of Natural Justice - Clandestine Removal - SSI Exemption - return of un-relied upon documents - demand based on assumptions and presumptions - Confiscation - penalty - HELD THAT - The sole ground for the Revenue for seizure of the goods found lying in the appellants factory is that the said goods were meant for clandestine removal. However, apart from the fact that the same were not as yet entered in the records, there is no evidence produced by the Revenue to reflect upon the assessees mala-fide intention that the said goods were not entered with an intention to clear the same without payment of duty. The said stand of the Revenue is based upon only assumptions and presumptions. Further in the absence of any confirmation of demand of duty or directions to the appellant to clear the said goods on proper payment of duty, confiscation of the same or imposition of penalty was neither warranted nor justified. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Seizure of unaccounted stock of finished goods
2. Proceedings initiated against the appellant
3. Confiscation of goods and imposition of penalties
4. Violation of principle of natural justice
5. Confirmation of duty and justification of confiscation and penalty

Analysis:

1. The Central Excise Officers seized unaccounted stock of finished goods of PVC Insulated Wires & Cables from the appellant's factory. The goods bore brand names belonging to another company, leading to suspicions of clandestine removal. This resulted in the initiation of proceedings against the appellant.

2. Proceedings were initiated through a Show Cause Notice proposing the confiscation of the seized goods and the imposition of penalties. The Original Adjudicating Authority eventually confiscated the goods with an option for redemption upon payment of a fine. Penalties were imposed on both the Manufacturing Unit and a partner of the unit, which was upheld by the Commissioner (Appeals).

3. The appellant contended that the orders violated the principle of natural justice as the Authorities Below did not return un-relied upon documents, hindering the preparation of their defense. Citing legal precedents, the appellant argued for the return of documents. The absence of a confirmed duty demand raised questions about the justification for confiscation and penalties.

4. The appellant's consultant argued that since no demand of duty was confirmed in the impugned order, and the goods were manufactured on a job work basis for the brand owner, confiscation and penalties were not justified. The Revenue's claim of clandestine removal lacked concrete evidence of mala-fide intentions on the appellant's part.

5. The Tribunal found that the Revenue's grounds for seizure lacked substantial evidence beyond assumptions and presumptions. Without confirmation of duty demand or instructions for proper payment, the confiscation and penalties were deemed unwarranted and unjustified. Consequently, the Tribunal set aside the impugned order and ruled in favor of the appellants, providing them with consequential relief.