2018 (1) TMI 696 - AT - Central Excise

Clandestine removal - goods stand confiscated by the lower authorities on the sole ground that the same were manufactured in the unregistered premises with intention to clear the same without payment of duty - Held that - Apart from the fact that the said premises were not separately registered, I note that there is no other evidence on record to show that the goods were meant for clandestine removal - Revenue case is solely based upon the fact that the said newly acquired premises were not registered and the goods were not entered in statutory records, it cannot be held that the same were meant for clandestine removal - confiscation set aside - penalty of ₹ 10,000/- imposed upon the appellant for the technical procedural breach of non maintenance of records and non entry of the goods - appeal allowed in part.

Summary

Issues:
1. Confiscation of goods manufactured in unregistered premises.
2. Imposition of penalties for non-maintenance of records and non-entry of goods in statutory records.

Analysis:
1. The appeals before the Appellate Tribunal CESTAT ALLAHABAD arose from the confiscation of goods manufactured in unregistered premises by M/s Paramount Pesticides Limited. The appellant believed that the newly acquired premises would be considered part of the earlier factory and fall under the same registration. However, Central Excise Officers seized the final product and raw material from the new premises, alleging that the goods were being manufactured in unregistered premises for clearance without duty payment. The appellant's explanation and lack of evidence showing malafide intent led the tribunal to conclude that the confiscation and penalties were not justified. The tribunal cited precedents from the Hon'ble Punjab & Haryana High Court and the Hon'ble Gujarat High Court to support its decision. While a penalty of ?10,000 was imposed for technical procedural breaches, the confiscation of goods and higher penalties were set aside.

2. In addition to the issue of confiscation, penalties were imposed on the appellant for non-maintenance of records and non-entry of goods in statutory records. The tribunal acknowledged the technical procedural breach but emphasized the absence of evidence indicating malafide intent. Citing the decision of the Hon'ble Gujarat High Court in a similar case, the tribunal imposed a penalty of ?10,000 for the procedural lapse. The tribunal's decision highlighted the importance of evidence and intent in determining penalties for such breaches, ultimately setting aside the higher penalties imposed by the lower authorities.

In conclusion, the Appellate Tribunal CESTAT ALLAHABAD ruled in favor of the appellant, setting aside the confiscation of goods and higher penalties while imposing a lesser penalty for technical procedural breaches. The decision underscored the need for evidence of malafide intent in imposing penalties and confiscation in cases involving non-registration and procedural lapses.