2019 (4) TMI 476 - HC - Central Excise

Clandestine removal - Interpretation of statute - Whether Rule 25 (1) (b) can be read in isolation without reading Rule 25 (1) (d) - Whether the iron bars weighing into tons could it be judged only with the estimation without actually weighing the same? - Held that - To attract the provisions of Rule 25 (1) (b) mens rea is not required to be proved and it has been held by the Supreme Court in case of Zunjarrao 1999 (8) TMI 142 - SUPREME COURT OF INDIA that the word liable used both in Rule 173 Q and Section 11 AC make such unaccounted goods liable to confiscation as well as penalty. The interpretation of word liable has been given by the Supreme Court that the interpretation of the provision is that not only offending goods liable to confiscation but shall be liable to penalty up to the amount specified in the Rule. It has held that levy of penalty is not discretionary but the amount of penalty is discretionary. When provisions of Section 11 AC are read with provisions of Rule 25, it is apparent that in view of admitted unaccountable goods being found, a panchnama was prepared in presence of the authorized signatory who signed without protest, authorities were well within their jurisdiction to confiscate such unaccounted goods and they could have been redeemed only on payment of duty and penalty and to that extent the order of appellate Tribunal does not suffer from any infirmity - appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Interpretation of Rule 25 (1) (b) in relation to Rule 25 (1) (d)
2. Validity of judgment based on estimation without actual weighing
3. Impact of non-supply of weighment sheets on the defense of the appellant
4. Necessity of supplying weighment and counting sheets for show cause notice

Detailed Analysis:

Issue 1: The appellant contended that Rule 25 (1) (b) cannot be read in isolation without considering Rule 25 (1) (d). The appellant argued that the Single Judge Bench's decision contradicted the Division Bench judgment of the same Tribunal. The appellant claimed that the matter should have been referred to a larger Bench and that the principles of natural justice were violated.

Issue 2: The Revenue argued that there was no need for a weighment sheet/counting sheet as the excess finished goods were detected and seized after a proper panchnama was prepared. The physical verification was done by counting and weighing in the presence of the authorized signatory and independent panch. The Revenue cited a Supreme Court case to support the acceptance of statements obtained without coercion as valid evidence.

Issue 3: The appellant demanded the supply of weighment and counting sheets, stating that without actual counting and weighment, a proper defense could not be submitted. The appellant insisted on the right to such documents if a panchnama was prepared after counting and weighing.

Issue 4: The Revenue argued that the confiscation was justified under Rule 25 (1) (b) without the need to prove mens rea. They emphasized that the levy of penalty was not discretionary when goods were unaccounted for, citing relevant rules and case law. The courts' interpretation highlighted that unaccounted goods were liable to confiscation and penalty.

The judgment referenced cases from various High Courts and the Supreme Court to support the interpretation of the law. It was concluded that the appellant's issues were factual and not substantial questions of law. The Tribunal's decision to confiscate the unaccounted goods and impose penalties was upheld, as the authorities were deemed to have acted within their jurisdiction. The appeal was dismissed based on the findings related to the interpretation of Rule 25 and Section 11 AC in conjunction with the specific circumstances of the case.