2018 (2) TMI 716 - AT - Central Excise

Confiscation - goods still lying in the factory - penalty - Held that - SCN proposed confiscation of final product which were still within the factory and such proposal through the said SCN was raised after the appellant had obtained registration under Central Excise Law - In the present case said finished goods were still lying in the factory. Therefore, they were not the goods on which duty was evaded and, therefore, they were not liable for confiscation and hence the penalty was not imposable on them - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Seizure of goods exceeding SSI exemption limit
- Confiscation and penalty imposition on seized goods
- Appeal against Order-in-Appeal before the Tribunal

Seizure of Goods Exceeding SSI Exemption Limit:
The case involved the appellant, engaged in manufacturing paints and distemper, who had officers of Central Excise visit their factory premises on suspicion of crossing the SSI Exemption limit. The appellant obtained Central Excise Registration after the visit. Subsequently, goods were seized under a seizure memo, and a show cause notice was issued proposing confiscation of the finished goods. The Original Authority confiscated the goods and offered an option for redemption on payment of a fine. The Commissioner (Appeals) later reduced the redemption fine but upheld the penalty imposition. The appellant contended that after registration, the goods not cleared were entered into the RG-1 Register, making them not liable for confiscation or penalty.

Confiscation and Penalty Imposition on Seized Goods:
The central issue revolved around the proposal for confiscation of the final products that were still within the factory premises even after the appellant obtained Central Excise Registration. The Tribunal noted that Central Excise Duty is payable upon clearance of goods, and goods on which duty is not paid are subject to confiscation. Since the finished goods were still present in the factory and not cleared, they were not considered goods on which duty was evaded. Consequently, the Tribunal set aside the Order-in-Appeal, ruling that the seized goods were not liable for confiscation or penalty.

Appeal Against Order-in-Appeal Before the Tribunal:
After hearing arguments from both sides, the Tribunal, through Member (Technical) Anil G. Shakkarwar, found in favor of the appellant. The Tribunal concluded that since the finished goods were not cleared from the factory after registration, they were not subject to confiscation or penalty. As a result, the impugned Order-in-Appeal was set aside, granting consequential relief to the appellant in accordance with the law. The judgment highlighted the distinction between duty payment on clearance and the liability for confiscation based on goods evasion, ultimately ruling in favor of the appellant and providing relief accordingly.