2016 (11) TMI 233 - AT - Central Excise

Confiscation - Rule 25 of Central Excise Rules, 2002 - Penalty - Held that - lower Authorities fell in error in applying the provisions of Rule 25 in respect of Betel Nut which is not an excisable goods in the form in which it was seized - Appeal allowed.

Summary

Issues:
Confiscation of Betel Nut under Central Excise Rules, 2002.

Detailed Analysis:
The appellant, engaged in the manufacture of pan masala, was found with unaccounted Betel Nut, perfumery compound, and packing material during a verification visit by Central Excise Intelligence officers. The Betel Nut was seized and valued at ?20,30,000. The Original Authority ordered its confiscation under Tariff Heading 21069030 as a product of Betel Nut classifiable under Chapter 21. The confiscation was based on Rule 25(1) of Central Excise Rules, 2002, for non-accountal of excisable goods. The appellant appealed against this decision.

Upon appeal, the Commissioner (Appeals) confirmed the confiscation order. However, the Appellate Tribunal found that the Betel Nut seized was raw material for the appellant and not an excisable product in the form it was seized. The Tribunal noted that Rule 25 of Central Excise Rules, 2002, applies only to excisable goods. The lower Authorities erred in applying this rule to Betel Nut, which is agricultural produce in raw form and not a manufactured product. The justification for confiscation based on the appellant's failure to submit statements regarding the details of Betel Nut was also deemed insufficient.

The Tribunal concluded that while the failure to submit required statements could lead to penalties, confiscation under Rule 25 was not justified as it pertains only to excisable goods. Since the Betel Nut in question was raw material and not excisable goods, the confiscation was deemed legally unsustainable. Consequently, the impugned order regarding the confiscation of Betel Nut was set aside, and the appeal was allowed in this regard.

In summary, the Tribunal's decision revolved around the incorrect application of Rule 25 of Central Excise Rules, 2002, to confiscate raw Betel Nut, which was not classified as an excisable good. The Tribunal emphasized the distinction between raw material and manufactured products, leading to the reversal of the confiscation order.