2016 (6) TMI 1054 - AT - Central Excise

Appeal for release of seized goods - furnishing of security - SSI exemption - two units are using common brand name - appellants are not maintaining any registers with regard to account of raw material and finished goods, that they manufacture goods bearing common brand name without obtaining Central Excise registration. - Held that - Rule 24 of Central Excise Rules, 2002 lays down the requirement of return only of seized books and other documents, but not of finished or other excisable goods. We have to say that the Supplementary Instructions relied upon by the Commissioner are only advisory in nature and do not have any statutory binding effect. Even in Section 110A of Customs Act, 1962 referred above, does not mandate or lay down any fixed percentage of security, merely laying down that seized goods etc., be released to the owner on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require ( emphasis added). Therefore, while imposing condition for provisional release, the Commissioner has to use the discretion in a judicious manner basing upon the facts and circumstances of each case. In the case before us, the goods ordered to be released are finished goods which were placed under seizure within the factory premises. Thus, when clearance is effected of such goods after release, the duty liability thereof will necessarily be discharged; this is one of the conditions in the impugned order also. - Appellants have deposited part amount during investigations. Taking all these aspects into consideration we are of the opinion that the circumstances do not require imposition of security of 25% of Bond amount (Value of goods) and that security of 10% of Bond amount would meet the ends of justice while taking care of the interest of Revenue. Ordered accordingly.

Summary

Issues:
Provisional release of seized goods under Central Excise Rules, 2002 - Legality of conditions imposed - Discretion of Commissioner in setting security percentage for Bond amount.

Analysis:
The judgment pertains to two appellants engaged in manufacturing plastic household articles availing SSI exemption. During a search, unaccounted raw materials and finished goods were seized by the department. The appellants filed a writ petition for release, leading to the release of raw materials and provisional release of finished goods subject to conditions. The appellants challenged the requirement of furnishing a bank guarantee for clearance, arguing the duty amount on goods was lower than the security demanded. The Commissioner justified the conditions citing CBEC's Supplementary Instructions. The Tribunal considered the legality of the conditions imposed for provisional release.

The Tribunal noted the appellants filed a writ petition challenging the conditions imposed for provisional release but withdrew it as the Division Bench took up the matter. Analyzing the issue, the Tribunal observed the Commissioner's order of provisional release was based on Central Excise Rules, 2002, and Central Excise Act, 1944, along with CBEC's Supplementary Instructions. It highlighted that the discretion for imposing security lies with the adjudicating authority, not fixed by statute. The Tribunal emphasized that the Supplementary Instructions are advisory and not legally binding. It stressed the need for discretion in setting security, considering the circumstances of each case. In this case, since the goods were finished products seized within the factory premises, the duty liability would be discharged upon clearance. The Tribunal found the security of 25% excessive and reduced it to 10% of the Bond amount to balance justice and revenue interests.

The Tribunal clarified that apart from the reduction in security percentage, it did not interfere with the provisional release order. The appeals were disposed of accordingly, with the judgment pronounced on 25/05/2016. The analysis delves into the legal aspects of provisional release under Central Excise Rules, emphasizing the discretionary power of the adjudicating authority in setting security percentages for Bond amounts based on individual case circumstances.