2017 (12) TMI 492 - AT - Central Excise

Excess stock - confiscation - whether excess aluminum scrap of 81,250 Kgs found in the factory premises of the appellant on 24.12.2012 is liable for confiscation and consequently under Rule 25(1) of the Central Excise Rules, 2002 and also penalty? - Held that - A plain reading of Rule 25(1) of the Central Excise Rules, 2002 it is clear that the goods are liable for confiscation in the event the same are not accounted for in their books of accounts. In the present case though it is not mentioned in their Daily Stock Account (DSA) register RG-1 but the same are duly accounted for in their internal production/process register - confiscation and penalty set aside.

Summary

Issues:
- Confiscation of excess aluminum scrap
- Imposition of penalty on the company and the General Manager

Confiscation of excess aluminum scrap:
The case involved the confiscation of 81,250 Kgs of excess aluminum scrap found in the factory premises of the appellant. The officers discovered the unaccounted scrap during a surprise visit and later issued a Show Cause Notice proposing confiscation and penalty. The General Manager explained that the scrap, though not recorded in the RG-1 register, was accounted for in their private production/work in process stock register. The Tribunal noted that Rule 25(1) of the Central Excise Rules, 2002 allows confiscation if goods are not accounted for in the books of accounts. However, since the scrap was duly recorded internally, the Tribunal deemed the confiscation unsustainable in law. Consequently, the confiscation and penalty imposed were set aside, and the appeals were allowed.

Imposition of penalty on the company and the General Manager:
The Tribunal considered whether the penalty imposed on the company and the General Manager was justified. The appellant argued that there was no intention to clear the excess scrap found in the factory, making confiscation and penalties unwarranted. The General Manager's explanation regarding the recording of scrap in the private register was accepted by the Tribunal. As the goods were accounted for internally, the Tribunal concluded that the penalties imposed were not sustainable in law. Therefore, the penalties on the company and the authorized signatory were set aside along with the confiscation order. The impugned orders were overturned, and consequential relief, if any, was granted as per the law.

This judgment highlights the importance of proper accounting practices and internal records in excise matters. It emphasizes the need for goods to be accurately reflected in the books of accounts to avoid confiscation and penalties. The Tribunal's decision focused on the discrepancy between the RG-1 register and the private production register, ultimately leading to the reversal of the confiscation and penalties in this case.