2018 (1) TMI 301 - AT - Central Excise

Redemption fine - penalty - it was alleged that appellant has failed to record their production of 383.138MT finished goods in their daily stock register and the goods found in stock was seized under Section 110 of Customs Act, 1962 - Held that - as per Section 110 (2) of the Customs Act, 1962, if the seized goods are not released within six months, then for extension of seizure, a show cause notice is required to be issued, failing which the goods are required to be released unconditionally - Admittedly, in this case, no SCN in terms of Section 110(2) of the CA, 1962 has been issued to the appellant therefore, the appellant is entitled to get the seized goods back unconditionally. Redemption fine - Held that - As the goods were required to be released unconditionally, in that circumstance, although the goods are liable for confiscation but, as the goods are not available nor any condition has been imposed on the appellant for seizure of the goods, no redemption fine can be imposed on the seized goods. Penalty - Held that - no statement during the course of investigation was recorded and no role of the appellant has been specified in the show cause notice - no penalty can be imposed on the appellant without specifying the role for confiscation of the goods. Appeal allowed.

Summary

Issues:
Imposition of redemption fine on the appellant company and penalty on the co-appellant.

Analysis:
The case involved an appeal against an order imposing redemption fine on the appellant company and penalty on the co-appellant. The facts revealed excess stock of finished goods during a search at the factory. The daily stock account showed discrepancies, leading to allegations of failure to record production in the register. Seized goods were alleged to be liable for confiscation, and penalties were imposed. The main appellant's penalty was set aside on appeal, leading to the current appeal.

The appellant argued that no show cause notice under Section 110(2) of the Customs Act was issued for extending seizure, thus goods should be released unconditionally. Citing a Tribunal decision, the appellant claimed no redemption fine could be imposed as goods were not available without any bond. Additionally, as no statement of the co-appellant was recorded, it was argued that no penalty could be imposed without clarifying the role.

The respondent opposed, referring to a Supreme Court decision to support the initiation of confiscation proceedings and penalties under different sections of the Customs Act. However, the Tribunal found merit in the appellant's arguments. It noted that without a show cause notice for extending seizure, the goods should have been released unconditionally. Consequently, while the goods were liable for confiscation, no redemption fine could be imposed due to their unavailability without any conditions. Similarly, as the co-appellant's role was not specified, the penalty imposed on them was set aside.

In conclusion, the appeals were allowed, setting aside the redemption fine on the seized goods and the penalty on the co-appellant.