2008 (1) TMI 301 - AT - Central Excise

Confiscation on presumption that finished goods lying in stock (which were in packed condition), could have been cleared without payment of duty goods which were found lying in stock unaccounted were only because of non-maintenance of proper record confiscation not justified penalty reducible

Summary

Issues:
1. Confiscation of excess goods and imposition of fine and penalty under Central Excise Rules.
2. Appeal against the order-in-appeal by the Revenue.
3. Interpretation of relevant case laws and maintenance of account in the case.
4. Consideration of evidence regarding attempt to clear goods without payment of duty.
5. Applicability of the decision in the case of CCE, Rajkot vs Amrut Ceramics.

Analysis:
1. The case involved the confiscation of excess goods and imposition of fine and penalty under the Central Excise Rules. The Departmental Officers found the manufactured goods in excess during stock verification, leading to initiation of proceedings. The original authority confiscated the excess goods, imposed a redemption fine of Rs.30,000/-, and a penalty of Rs.1,14,003/-. The Commissioner (Appeals) later set aside the confiscation, reducing the penalty to Rs.5 lakhs due to a technical lapse in non-accountal of the goods. The Revenue contended that the Commissioner erred in his observations regarding the accountal of goods and the attempt to clear goods without payment of duty.

2. The Revenue filed an appeal against the order-in-appeal, arguing that the excess quantity of goods was deducted from recorded stock and not from fresh production, and that the unaccounted bundles were ready for discharge to customers, implying a potential attempt to clear goods without duty payment. The Revenue disagreed with the Commissioner's reliance on certain case laws and claimed that the facts of the case were distinguishable.

3. The respondent's advocate relied on the decision of the Tribunal in the case of CCE, Rajkot vs Amrut Ceramics, emphasizing the importance of proper maintenance of accounts. The Tribunal noted irregularities in the account maintenance, acknowledging unaccounted finished products but found no evidence of an attempt to clear goods without paying duty.

4. The Tribunal concluded that while there were irregularities in account maintenance, there was no proof of attempting to clear goods without duty payment. The presumption that the packed goods could have been cleared without payment was deemed insufficient for confiscation. The Tribunal referenced a case holding that non-entry in the register alone does not constitute goods manufacture unless supported by evidence of removing the goods. The decision to restrict the penalty to Rs.5,000 was deemed appropriate due to the technical lapse.

5. The Tribunal found the decision in the case of CCE, Rajkot vs Amrut Ceramics relevant, emphasizing the importance of evidence supporting attempts to clear goods without payment. The Tribunal rejected the Revenue's appeal, maintaining that the technical lapse did not warrant harsh fines or penalties, in line with the principles established in the referenced case law.