2017 (12) TMI 218 - AT - Central Excise

Non-maintenance of statutory records in respect of availability of the said goods in the factory premises - confiscation u/r 25 of CER - Held that - Since, Rule 25 ibid has been invoked for confiscation of the seized goods and for imposition of penalty on the appellant, it is to be ascertained, whether the said statutory provisions are applicable under the facts and circumstances of the case for confiscation of the said seized goods. On perusal of Rule 25 ibid, it reveals that raw material is neither covered in clause (a) (b) and (c) of sub-rule (1) of Rule 25 and also not appearing in clause (d) of the said sub-rule. Since Rule 25 only deals with the excisable goods manufactured by the person and admittedly other than chewing tobacco, the appellants are not manufacturing any other products in their factory, excepting chewing tobacco i.e. finished product of the appellant, other goods cannot be confiscated under Rule 25 ibid. Out of 8 items seized and confiscated by the department, only the finished product viz. chewing tobacco of Panna brand valued at ₹ 3,94,400/- is liable for confiscation and redemption fine can be imposed for redeeming the said goods only. Since, the option was given to the appellant to redeem all the seized goods on payment of redemption fine of ₹ 2,50,000/-, redemption fine can be reduced to Rs. One lakh. Penalty u/r 26 imposed on Shri Bhavesh Chaplot, the authorized signatory of M/s Nirmal Products - Held that - penalty cannot be imposed under Rule 26 ibid on the ground that the goods were not removed outside the factory premises in clandestine manner and also for non maintenance of proper records, the main appellants have already been penalized under Rule 25 ibid - penalty set aside. Appeal allowed in part.

Summary

Issues:
Confiscation of seized goods under Rule 25 of Central Excise Rules, 2002 and imposition of penalties.

Analysis:
The case involved appeals against an order passed by the Commissioner, Central Excise (Appeals), Jaipur, regarding the confiscation of goods and imposition of penalties on the appellants, who were engaged in the manufacture of lime mix chewing tobacco and pouches. The Central Excise officers seized goods from the factory premises of the appellants due to the absence of statutory records. The department issued a Show Cause Notice seeking duty recovery and penalties. The Commissioner (Appeals) upheld the demand, leading to the appeal. The appellants did not contest the duty liability but challenged the confiscation of seized goods, arguing that only finished products could be confiscated under Rule 25, not raw materials or other goods. They also contested the penalty imposed on the authorized signatory under Rule 26, claiming no role in the violation of statutory provisions.

Upon review, the Tribunal found that the RG-1 register was not properly maintained by the appellants, leading to the seizure and confiscation of goods under Rule 25. However, Rule 25 only applies to excisable goods manufactured by the person, excluding raw materials. As the appellants only produced chewing tobacco, the Tribunal concluded that only the finished product could be confiscated under Rule 25. Citing a precedent, the Tribunal determined that raw materials or semi-finished goods cannot be confiscated under Rule 25. Consequently, out of the seized items, only the chewing tobacco was liable for confiscation, with a reduced redemption fine imposed. The personal penalty on the authorized signatory was set aside since the main appellants had already been penalized under Rule 25 for non-maintenance of proper records.

In conclusion, the Tribunal modified the impugned order by reducing the redemption fine and setting aside the penalty on the authorized signatory. The appeals filed by the appellants were disposed of in their favor.