2017 (6) TMI 469 - AT - Central Excise

Quantum of redemption fine - 2025 kilogram of copper valued at ₹ 6,48,000/- carried in the tempo, without any valid transport document, and, therefore, was placed under seizure - Held that - the impugned Order in Appeal has ignored the fact that on the day of the visit to the factory the shortage of raw material was recorded along with the excess of finished goods - When the goods are lying in the factory itself the Revenue has treated them as excess mainly on account of non recording of said goods in RG-1 register. Thus, the lapse on the part of the appellant is only of non-recording of goods in RG-I register and it is not the case of clandestine removal of goods. The revenue has not given any evidence where the goods went, how they were removed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Increase in redemption fine and penalty under Central Excise Rules.
2. Confiscation of copper rods and excess finished goods.
3. Allegation of clandestine removal and non-recording of goods in RG-1 register.

Analysis:

Issue 1: Increase in redemption fine and penalty under Central Excise Rules
The appeal was filed against an Order in Appeal confirming a redemption fine of ?15 lakhs and increasing the redemption fine for confiscation of copper rods from ?50,000 to ?2 lakhs. Additionally, a penalty of ?50,000 imposed under Rule 25 of Central Excise Rules, 2002 was increased to ?10 lakhs. The appellant challenged these increases in the redemption fine and penalties.

Issue 2: Confiscation of copper rods and excess finished goods
Central Excise officers intercepted a tempo carrying copper wire rods without valid transport documents, leading to the seizure of 2025 kilograms of copper. Subsequently, excess finished goods were found at the appellant's factory premises, while raw material was short of the recorded balance. The original order vacated the seizure of excess finished goods but imposed penalties and redemption fines. The Commissioner (Appeals) increased the redemption fine and imposed additional fines, leading to the current appeal.

Issue 3: Allegation of clandestine removal and non-recording of goods in RG-1 register
The appellant argued that the shortage of raw material and excess finished goods indicated conversion rather than clandestine removal. The failure to record finished goods in the RG-1 register was attributed to administrative lapses due to the absence of the accountant. The Revenue contended that the excess goods should be liable for duty payment due to non-recording in the register. The appellant cited case law to support the lack of tangible evidence for clandestine activities.

In the final analysis, the Tribunal found that the impugned order had ignored crucial facts regarding the shortage of raw material and excess finished goods. The appellant's explanation for the non-recording of finished goods was accepted, and it was determined that there was no evidence of clandestine removal. The Tribunal disagreed with the Revenue's assumptions and overturned the impugned order, allowing the appeal and providing consequential relief to the appellant.