2017 (9) TMI 1362 - AT - Central Excise

Confiscation - Valuation of stock - case of Revenue is that the officers had erred in evaluating the stock as they had not weighed the stock and their observations were merely as per eye estimation - Held that - there is no dispute that the appellant failed to record the excess quantity of finished goods in the RG-I register. Thus, there is contravention of the Central Excise Rules, 2002. It is noted that large quantity of finished goods was found in excess. The finished goods found on Physical verification was 151165.28 Kgs and the stock recorded in RG-I register was 113550 Kgs. The quantity of 37615.28 Kgs was found in excess. The appellant has not explained the reason for excess of such large quantity of difference, and therefore, confiscation of goods is justified - the Redemption Fine reduced to ₹ 75,000/- and penalty to ₹ 50,000/- respectively - appeal allowed - decided partly in favor of appellant.

Summary

Issues:
- Confiscation of seized goods and imposition of fine and penalty under Central Excise Rules, 2002.
- Evaluation of stock by Central Excise officers based on physical verification and eye estimation.
- Allegation of excess stock of finished goods and clandestine manufacture.
- Failure to record excess quantity of finished goods in the RG-I register.
- Justification of confiscation of goods and reduction of Redemption Fine and penalty.

Analysis:
The judgment by the Appellate Tribunal CESTAT KOLKATA involved the confiscation of seized goods and imposition of fines and penalties under the Central Excise Rules, 2002. The appellant, engaged in manufacturing M.S ERW Black pipes/tubes, faced allegations of excess stock of finished goods during a stock verification by Central Excise officers. The Adjudicating Authority had confiscated the seized goods and imposed a Redemption fine and penalty. The Commissioner (Appeals) had rejected the appeal filed by the appellant, leading to the case being brought before the Tribunal.

The main contention raised by the appellant was the evaluation of stock by the Central Excise officers, who had initially estimated the excess stock based on eye estimation. However, it was argued that a physical verification was later conducted in the presence of the factory's authorized signatory, confirming the difference in stock quantity. The appellant further argued that there was no corroborative evidence to support the allegation of excess stock and clandestine manufacture, emphasizing that any duty paid by the appellant was available to buyers as Cenvat credit, leading to a revenue-neutral situation.

Upon examination of the evidence, it was found that the appellant had failed to record the excess quantity of finished goods in the RG-I register, thereby contravening the Central Excise Rules. The Tribunal noted a significant discrepancy between the recorded stock in the register and the actual physical verification results, justifying the confiscation of goods. The authorized signatory of the factory confirmed the excess stock but failed to provide a satisfactory explanation for the large quantity difference.

Ultimately, the Tribunal upheld the confiscation of goods but decided to reduce the Redemption Fine and penalty imposed. The Redemption Fine was reduced to &8377; 75,000 and the penalty to &8377; 50,000, acknowledging the need for a lesser quantum of fines considering the circumstances of the case. The appeal was disposed of with the revised fines and penalties, bringing the legal proceedings to a conclusion.