2017 (12) TMI 495 - AT - Central Excise

Penalty u/r 25 of CER - Rule 4(4) of Central Excise Rules, 2002 - clandestine removal - Held that - when the finished goods of defective biris or sub-standard biris which were stored in adjoining premises outside the factory premises were duly accounted for in the RG1 register, and no evidence of clandestine removal being there, have held that only a case of venial breach of the provisions of Rule 4(4) of CER, 2002 is made out - except this venial breach of Rule 4(4), there is no other breach of the provisions of the Act and the Rules nor any case of clandestine removal is made out against the appellant - penalty not justified - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Justification of retaining penalty for breach of Central Excise Rules, 2002.

Analysis:
The judgment revolves around the issue of whether the penalty imposed on the appellant co-operative society for breaching Rule 4(4) of the Central Excise Rules, 2002, was justified. The Commissioner (Appeals) had retained a penalty of ?30,900 on the appellant for storing sub-standard quality bidis separately in a godown due to space constraints, which was considered a violation of the said rule. The appellant had explained the situation, stating that the stock was duly recorded in the statutory record, and no clandestine removal had taken place. The Commissioner (Appeals) found that only a venial breach of Rule 4(4) was made out and that no evidence of clandestine removal existed. The rule allows storing goods outside the factory premises in exceptional circumstances, subject to specified conditions. The judgment emphasized that apart from this minor breach, no other violations of the Act or Rules were found, and no clandestine removal was established. Consequently, the penalty of ?30,900 was deemed unjustified, and the appeal was allowed, granting the appellants consequential benefits as per the law.

In summary, the judgment analyzed the circumstances surrounding the storage of sub-standard bidis by the appellant co-operative society, the applicability of Rule 4(4) of the Central Excise Rules, 2002, the absence of clandestine removal, and the justification for the imposed penalty. The decision focused on the lack of evidence supporting clandestine activities, the minor nature of the breach, and the legal provisions allowing for exceptions under Rule 4(4). Ultimately, the penalty was set aside as unjustified, providing relief to the appellants in accordance with the law.