2017 (12) TMI 591 - AT - Central Excise

Clandestine removal - cash recovered from the office of the appellant was seized on the ground that this cash is proceed of sale of clandestine removal of goods - Held that - in entire case it was not established that who is manufacturer of the goods and whether the goods were cleared clandestinely by carrying out investigation with the manufacturer. Therefore there is no link between the manufacturer, manufactured goods, receipt thereof and sale of same goods by appellant. The confiscation of cash was ordered under Section 121 of Customs Act, 1962 which is applicable in case of central excise. It has to be established that goods were cleared clandestinely. Since no investigation was carried out on the part of any manufacturer, even name of any manufacturer was not indicated, in the entire investigation, it cannot be concluded that cash lying with the broker is against the sale of the goods which was clandestinely removed, therefore for holding that cash is towards proceed of clandestine removal of goods Appeal allowed - decided in favor of appellant.

Issues:
1. Confiscation of cash seized from the premises of M/s. Balaji Steel under the provision of Section 121 of the Customs Act, 1962 read with Section 12 of the Central Excise Act, 1944.
2. Imposition of penalty on Shri. Sanjay Mittal under Rule 26/27 of the Central Excise Rules, 2002.
3. Appeal against the Order in Original before the Commissioner(Appeals).

Analysis:

Issue 1: Confiscation of cash seized under the Customs Act and Central Excise Act
The case involved the confiscation of cash amounting to ?13,80,000 seized from the premises of M/s. Balaji Steel. The appellant, a broker, claimed that the cash was not linked to clandestine removal of goods, and thus, should not be confiscated. The appellant's counsel argued that without establishing the clandestine removal of goods and linking it to the cash seized, confiscation was not justified. The Tribunal found that no investigation was conducted to establish the connection between the goods, their manufacturer, and the cash seized from the appellant's office. It was ruled that without proving clandestine removal of goods, confiscation under Section 121 of the Customs Act, 1962 was not valid. Citing previous judgments, the Tribunal emphasized that the burden of proving the cash as proceeds of goods cleared without duty lay with the Revenue, which was not discharged in this case. Consequently, the confiscation of cash was deemed incorrect, and the impugned order was set aside.

Issue 2: Imposition of penalty under Rule 26/27 of the Central Excise Rules, 2002
The adjudicating authority imposed a penalty of ?2,20,000 on Shri. Sanjay Mittal under Rule 26/27 of the Central Excise Rules, 2002. However, the appellant challenged this penalty, arguing that since the clandestine removal of goods was not established, the penalty was unwarranted. The Tribunal, in its analysis of the case, found that without proving the clandestine removal of goods, the penalty under Rule 26/27 could not be justified. The lack of evidence linking the cash seized to clandestine activities led to the conclusion that the penalty was not applicable in this scenario. Therefore, the penalty imposed on the appellant was set aside along with the confiscation of cash.

Issue 3: Appeal against the Order in Original before the Commissioner(Appeals)
The appellant had filed an appeal before the Commissioner(Appeals) against the Order in Original, which was rejected, upholding the confiscation of cash and imposition of penalty. The appellant then approached the Tribunal challenging the decision. The Tribunal, after considering the arguments presented by both sides and examining the record, found in favor of the appellant. The Tribunal set aside the impugned order, allowing the appeal and ruling that the confiscation of cash and imposition of penalty were not justified due to the lack of evidence linking the cash to clandestine removal of goods. The decision of the Commissioner(Appeals) was overturned, and the appellant's appeal was allowed.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, relevant legal provisions, and the Tribunal's decision, providing a comprehensive understanding of the case.

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