2018 (8) TMI 5 - AT - Central Excise

Clandestine removal - confiscation - penalty - Held that - It would appear that there is no order for recovery of duty under section 11A of Central Excise Act, 1944 nor any finding to conclude that duty liability did arise. In the absence of any adjudication of duty liability, confiscation cannot arise nor does any penal consequence - appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of duty liability, interest thereon, imposition of penalty, fine in lieu of confiscation of goods alleged to be removed clandestinely.

Analysis:
The judgment deals with a dispute regarding duty liability, interest, penalty, and fine related to the alleged clandestine removal of goods by a proprietary concern. The Order-in-appeal upheld the duty liability but quashed the penalty imposed under rule 25 of Central Excise Rules, 2004. The appellant referred to a circular prescribing procedures for textiles and textile articles, allowing clearance with final adjustment for returned goods within five days.

The dispute arose from clearances between specific dates due to excess stock of finished goods found during an inspection visit by Central Excise authorities. The goods covered by packing slips were seized, and the appellant claimed compliance with the circular by discharging duty liability within five days. The appellant cited legal precedents, including a High Court judgment and a Tribunal decision, questioning the validity of the proceedings.

The Authorized Representative relied on a Tribunal decision and a Supreme Court judgment, arguing that the goods were removed clandestinely against packing slips lacking material particulars corresponding to invoices. It was noted that the appellant did not furnish any documents in their defense or seek to produce evidence before the adjudicating authority.

The analysis of the order-in-original revealed no recovery order under section 11A of the Central Excise Act, 1944, or any finding establishing duty liability. As a result, confiscation and penal consequences could not be imposed in the absence of adjudication of duty liability. Consequently, the impugned order was set aside, and the appeal was allowed.