2018 (7) TMI 164 - AT - Central Excise

Confiscation of raw material, packing material and finished goods - Redemption fine - case of appellant is that Rule 25 of Central Excise Rules under which these goods have been confiscated is meant only for finished goods - Clandestine manufacture and removal - paints and varnishes - Held that - It is admitted fact that no Cenvat credit has been taken by the appellant. In that situation, there is force in the contention of the appellant that there is no provision in the Central Excise Act for confiscation of such raw material and packing material - also, the first appellate authority in para 10 of the impugned order has failed to give any cogent basis for confiscation of raw material and packing material - the confiscation of the raw material and packing material is without authority of law and is accordingly set aside. Confiscation of inished goods, which were found in the premises - Held that - It is not disputed that the appellant were maintaining kachcha parchis for clandestine removal of the goods. The appellant had already crossed turnover limit of SSI exemption - the appellant had been systematically clearing the goods without payment of duty in clandestine manner. In these circumstances, reasonable conclusion is that the appellant wanted to remove finished goods in clandestine manner in active connivance with his close relatives as they had already crossed SSI exemption limit - confiscation of finished goods and redemption fine thereupon upheld. The appellant are only contesting confiscation of raw material, packing material and finished goods and imposition redemption fine. It clearly shows that the appellant have accepted that there was clandestine removal of the goods and there was malafide intent to evade payment of duty. Appeal allowed in part.

Summary

Issues Involved:
1. Confiscation of raw material and packing material.
2. Confiscation of finished goods.
3. Imposition of redemption fine.

Detailed Analysis:

1. Confiscation of Raw Material and Packing Material:
The appellant contested the confiscation of raw material and packing material valued at ?21,65,598/- and ?84,090/- respectively, arguing that they had not taken any Cenvat credit on these materials. The contention was that Rule 25 of the Central Excise Rules, under which these goods were confiscated, applies only to finished goods. The appellant relied on the judgment of the Punjab & Haryana High Court in the case of *Annapurna Impex Pvt. Ltd.*, which stated that there is no provision for the confiscation of raw material and packing material if no Cenvat credit has been availed. The Tribunal agreed with this argument, noting that the Department could not show any provision allowing for such confiscation. Consequently, the confiscation of raw material and packing material was set aside.

2. Confiscation of Finished Goods:
The appellant also contested the confiscation of finished goods valued at ?8,02,434/-. The investigation revealed that the appellant had crossed the SSI exemption limit and was engaged in systematic clandestine removal of goods using "kachcha parchis" (loose slips) for unaccounted clearances. The appellant did not register with the Central Excise Department despite crossing the turnover limit of ?150 lakh and failed to produce any documentary evidence to show that the goods were accounted for in their books. The Tribunal found that the appellant intended to remove the finished goods clandestinely, as evidenced by the statements of Shri Rajeev Juneja and Shri Gulshan Kumar. Therefore, the confiscation of finished goods was upheld, but the redemption fine was reduced to ?80,000/-.

3. Imposition of Redemption Fine:
The appellant challenged the imposition of a redemption fine of ?3,25,000/- on the confiscated goods. The Tribunal modified the order, reducing the redemption fine to ?80,000/- for the finished goods while setting aside the confiscation of raw material and packing material.

Conclusion:
The Tribunal's order modified the decision of the Commissioner (Appeals) as follows:
- Confiscation of raw material and packing material was set aside.
- Confiscation of finished goods was upheld.
- Redemption fine was reduced to ?80,000/-.

The remaining parts of the Commissioner (Appeals) order were upheld as they were not contested by the appellants. The appeal was disposed of accordingly.