2018 (2) TMI 913 - AT - Central Excise

Confiscation - penalty u/r 25 of CER - clandestine removal - Held that - the production particulars of the excisable goods were not entered in the statutory records on 29.9.2010 for the reason that the stock particulars were verified by the department on the said date at 2.00 P.M. Further, it is not the case of the department that the appellant had the intention to remove the excess availability of goods in clandestine manner - the provisions of Rule 25 cannot be invoked for imposition of redemption fine and penalty against the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Confiscation of goods and imposition of penalty under Rule 25 of Central Excise Rules, 2002.

Analysis:
The case involved the confiscation of excess unaccounted stock of finished goods under Rule 25 of the Central Excise Rules, 2002. The appellant, engaged in the manufacture of stainless steel products, had discrepancies in the recorded quantity of goods compared to the physical stock during a visit by Central Excise officers. Show cause proceedings were initiated, resulting in the imposition of redemption fine and penalty on the appellant.

The appellant's advocate argued that the physical verification was based on estimation, and the appellant maintained daily stock accounts, entering production details at the end of the day. Due to a search operation on a specific date and time, the recorded stock did not match the physical stock, leading to excess stock. The advocate contended that since the goods were physically present, charges of clandestine removal were unjustified, citing judicial precedents to support the argument.

On the other hand, the Revenue's representative supported the findings in the impugned order. After hearing both sides and reviewing the case records, the Member (Judicial) accepted the appellant's submissions. It was noted that the production details were not recorded in statutory records due to the timing of the department's verification. Additionally, there was no evidence of intent for clandestine removal. Consequently, the Member concluded that Rule 25 could not be invoked for imposing redemption fine and penalty. Notably, Section 11AC of the Central Excise Act was not invoked for confirming the demand.

Ultimately, the impugned order was found lacking merit in supporting the fine and penalty imposition. Therefore, the appeal filed by the appellant was allowed, and the fine and penalty were set aside in the judgment pronounced on 12.1.2018.