2018 (5) TMI 913 - AT - Central Excise

Clandestine removal - finished goods and raw material not found entered in the records - Confiscation of finished goods and raw material - Held that - the law is settled that the raw material cannot be confiscated on the ground of their non-entry in the records, especially when no Modvat credit stand availed in respect of such raw materials. Also, there is nothing on record to suggest that non-entry of the final product in the records was with a malafide intention. In such a scenario, confiscation of the goods or imposition of penalties upon the appellant was neither justified nor warranted - However, it is made clear that the appellant would pay the duty in respect of the said seized goods (if not already paid), at the time of their clearance. Cash recovered from the premises of M/s Naveen Impex - Held that - there was no allegation in the show cause notice in respect of the Indian currency being the sale proceeds of the smuggled or clandestinely removed items - decided in favor of assessee. Appeal allowed - decided in favor of assessee.

Summary

Issues:
1. Confiscation of finished goods and raw materials
2. Confiscation of cash recovered
3. Imposition of penalties
4. Setting aside of demands by Commissioner (Appeals)

Analysis:
1. The case involved appeals from both the assessee and the Revenue regarding the confiscation of finished goods and raw materials. The Revenue had issued show cause notices proposing confiscation of seized final products and raw materials, along with penalties. The Original Adjudicating Authority confirmed the demands and penalties, which were challenged before the Commissioner (Appeals). The Commissioner set aside the demand against the assessee but upheld the redemption fines and penalties. The Tribunal, after hearing both sides, found no evidence of malafide intention for non-entry of goods in records. Consequently, the confiscation and penalties were set aside, with a direction for duty payment upon clearance. The appeal of the assessee was allowed, and the Revenue's appeal for penalty imposition was rejected.

2. The issue of confiscation of cash recovered from the premises of another party was also addressed. The Original Adjudicating Authority had ordered the release of the cash after imposing fines and penalties, a decision not appealed by the Revenue. The Commissioner (Appeals) sustained this part of the order, which the Revenue further challenged. The Tribunal noted the lack of allegations regarding the cash being proceeds of smuggled items and upheld the previous decisions. The appeal by the Revenue against the order of Commissioner (Appeals) was rejected, and the decision of the Original Adjudicating Authority regarding the cash was maintained.

3. The imposition of penalties was a significant issue in the case. The Commissioner (Appeals) set aside a penalty imposed twice on a party, deeming it unjustifiable. The Tribunal agreed with this decision and rejected the Revenue's appeal against the penalty imposition. The Tribunal also set aside penalties and redemption fines imposed on another party, ruling that non-entry of goods in records did not justify confiscation, especially when no manufacturing activity was involved. The appeals of the parties were allowed with consequential relief, and the Revenue's appeals against the penalties were rejected.

4. Lastly, the judgment addressed the setting aside of demands by the Commissioner (Appeals). The Tribunal found no dispute regarding the setting aside of a specific demand and upheld the decisions made by the Commissioner. The appeals of the parties were allowed with consequential relief, and the Revenue's appeals were rejected, concluding the matter in favor of the appellants.