2018 (4) TMI 826 - AT - Central Excise

Confiscation of raw material u/r 25 of CER, 2002 - Non- accountal or improper accountal of raw material - Held that - none of the 4 categories of offence mentioned in the said rule is applicable to the present case in respect of raw materials - The appellant is not the manufacturer or dealer or availed any benefit out of such material. The appellant was not liable to pay duty on the goods manufactured by using such raw material as they were enjoying SSI exemption. In such situation - application of Rule 25 for raw material is not justified - appeal allowed.

Summary

Issues:
1. Confiscation of raw materials and finished goods under Rule 25 of Central Excise Rules, 2002.
2. Duty liability on the seized goods.
3. Provision for confiscation of raw materials.
4. Applicability of Rule 25 in the present case.
5. Justification of seizure and confiscation of raw materials.
6. Reduction of redemption fine and penalty imposed on the appellant.

Analysis:
1. The appeal challenged the order of the Commissioner (Appeals) confirming the confiscation of raw materials and finished goods valued at specific amounts from the appellant's premises. The Original Authority ordered confiscation under Rule 25 of Central Excise Rules, 2002, with an option for redemption on payment of a fine. A penalty equivalent to the redemption amount was also imposed on the appellant.

2. The appellant argued that there was no duty liability on the seized goods and that the raw materials were not manufactured by them but procured. They contended that the confiscation of raw materials lacked legal authority as the requirements of Rule 25 were not met, and there was no link to clandestine manufacture. The appellant sought a reduction in the redemption fine and penalty.

3. The Authorized Representative emphasized the necessity for manufacturers of excisable goods to maintain proper accounts of both finished goods and raw materials. Non-accounting or improper accounting of either type of goods could lead to penal consequences.

4. Upon review, the Tribunal observed that the raw materials seized were not manufactured by the appellant, and they had not availed Cenvat credit on them. Despite this, the Original Authority proceeded with confiscation solely based on the absence of documented proof of duty payment. The Tribunal noted that none of the offenses specified in Rule 25 applied to the raw materials in question, as the appellant was not the manufacturer, dealer, or beneficiary of the materials for duty payment purposes.

5. Citing a relevant case law, the Tribunal highlighted that mere storage of excisable goods in a factory by a manufacturer does not automatically trigger Rule 25. Additional elements are required to invoke the provision. Consequently, the Tribunal concluded that the confiscation of raw materials was unjustified, setting aside the impugned order and the associated redemption fine and penalty.

6. In light of the legal analysis, the Tribunal partially allowed the appeal, overturning the decision on the confiscation of raw materials and the imposed penalties. The judgment clarified the legal position regarding the application of Rule 25 in cases involving seized goods and emphasized the need for proper legal justification for confiscatory actions in excise matters.