2018 (2) TMI 1299 - AT - Central Excise

Clandestine removal - excess stock of finished goods - non-accountal of finished goods - Held that - Merely non-accountal of the finished goods in the RG-1 register pending chemical analysis or the analytical report is not up to the mark would not lead to an inference that the same were kept to be cleared clandestinely and confiscation of the excess stock attributing clearance without payment of duty - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confiscation of excess excisable goods found in the factory premises.
2. Imposition of penalty on the appellant and personal penalty on an individual under Rule 26 of the Central Excise Rules, 2002.

Analysis:
1. The case involved an appeal against an order passed by the Commissioner of Central Excise (Appeals) Vadodara regarding the confiscation of excisable goods found in excess in the stock of the appellant's factory. The goods were valued at &8377; 2,32,000 and were not entered in the RG-1 register. A show-cause notice was issued proposing confiscation and penalty, which was later adjudicated resulting in the confiscation of goods with an option to redeem on payment of a fine and imposition of penalties. The appellant contended that the excess goods were not entered in the register as they had not passed the quality test, supported by an analysis report. The appellant argued that the goods were not liable for confiscation, citing a relevant judgment. On the other hand, the Revenue argued that since the excess stock was not recorded in the register and no proper explanation was provided, confiscation was justified.

2. After hearing both sides and examining the records, the Tribunal found that there was indeed excess stock of CMIC Acid in the appellant's premises. The appellant explained that the goods did not pass the quality control test, hence were not entered in the register. The Tribunal noted that the mere non-accountal of finished goods pending chemical analysis does not imply clandestine clearance. It was observed that the lack of explanation by the authorized signatory at the time of the officers' visit did not prove an intent for clandestine clearance. The Tribunal referred to a quality control analysis report and concluded that the goods were not kept for clandestine clearance without payment of duty. Therefore, the impugned order of confiscation was set aside, and the appeal was allowed.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the order of confiscation and penalties imposed, based on the lack of evidence indicating intent for clandestine clearance and the justification provided regarding the non-entry of goods in the register due to pending quality control tests.