2019 (7) TMI 1013 - AT - Central Excise

Process amounting to manufacture - printing of glass bottles - provisional release of detained goods - HELD THAT - On provisional release the goods were placed at the disposal of the appellant and as per the submissions during hearing appellant has cleared the said goods on payment of duty whenever the occasion for clearance arose. Therefore, it is not established that the goods which were confiscated were cleared without payment of duty and therefore, there was no occasion to demand central excise duty on the same. There was no occasion for invocation of provisions of Section 11AC of Central Excise Act, 1944 in respect of the confiscated goods - the order of confiscation under Rule 25 of Central Excise Rules, 2002 is not as per the provision of law in the present case - Whereas the confiscation is not as per the provision of law, the charge of abatement for clandestine removal does not survive. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Confiscation of goods under Rule 25 of Central Excise Rules, 2002 without payment of duty and imposition of penalties.

Analysis:
The appellant, engaged in manufacturing goods falling under Chapter 70 of Schedule to Central Excise Tariff Act, 1985, faced confiscation of goods by Central Excise officers due to non-payment of duty and lack of registration. The seized goods were provisionally released, but a show cause notice was issued proposing confiscation and penalties under Rule 25 and Rule 26 of Central Excise Rules, 2002. The Original Authority upheld the confiscation and imposed penalties. The appellant appealed to the Commissioner (Appeals) who affirmed the Order-In-Original. The appellant then approached the Tribunal challenging the order.

The main contention raised by the appellant's representative was that Rule 25 should be read in conjunction with Section 11AC of the Central Excise Act, 1944. It was argued that penalties under Section 11AC can only be imposed when Central Excise Duty is demanded under Section 11A. Therefore, invoking Rule 25 without a prior demand under Section 11A was deemed incorrect.

After hearing both sides, the Tribunal noted that the confiscated goods were cleared by the appellant on payment of duty whenever they were released for clearance. It was established that the goods were not cleared without payment of duty, negating the need for invoking Section 11AC. Consequently, the Tribunal held that the confiscation under Rule 25 was not in accordance with the law. As a result, the charge of abatement for clandestine removal was deemed invalid, leading to the setting aside of the impugned order and allowing both appeals.

In conclusion, the Tribunal's decision focused on the proper application of rules regarding confiscation of goods and imposition of penalties under the Central Excise Act, 1944 and Central Excise Rules, 2002. The judgment emphasized the necessity of a demand for Central Excise Duty under Section 11A before invoking penalties under Section 11AC and highlighted the importance of compliance with legal provisions in confiscation proceedings.