2019 (11) TMI 1347 - AT - Central Excise

Clandestine removal - batteries (lead acid battery) - whether appellant have manufactured and stored their finished products without entering the same in the statutory records for clandestine removal? - HELD THAT - Arising from the same investigation and for the same period, two show cause notices have been issued. One for the seizure part and one for the duty part alongwith interest and penalty. Further, as regards the duty part, vide order-in-original No. 04/CE/demand/2017-18 dated 18.05.2017, the adjudicating authority have allowed conclusion of the proceedings under Section 11AC(1)(d) of the Central Excise Act. The said section provides for conclusion of all proceedings, arising from an investigation. Thus, Revenue has erred in passing separate order of confiscation and penalty, arising from the same investigation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Manufacture and storage of finished products without entering in statutory records for clandestine removal

Analysis:
The appellant, a manufacturer of batteries, was found to have manufactured batteries without entering them in statutory records, leading to suspicion of clandestine removal. The appellant's units were located in RIICO Industrial Area, Ajeetgarh, Sikar, Rajasthan. During a search and seizure operation, it was discovered that the appellant was not registered with the Department but was manufacturing batteries under the brand names "Seva" and "Solar" along with lead plates. The officers found finished goods and manufacturing equipment at the premises, with discrepancies noted such as the absence of manufacturer details on batteries. The officers also found stored goods at another unit, M/s Seva Metal, which belonged to the same owner.

The officers seized goods valued at ?34,77,658 from M/s Seva Udyog and ?10,01,275 worth of batteries from M/s Seva Metal. Subsequently, discrepancies were found in the stock during a follow-up visit, leading to the deposit of Central Excise duty. The appellant obtained Central Excise registration and provisional release of goods after furnishing bonds. Show cause notices were issued demanding duty, penalty, and proposing confiscation of goods. The adjudication resulted in orders imposing penalties and confirming confiscation.

The appellant appealed before the Commissioner (Appeals) challenging the confiscation of goods, citing non-finished state and regulatory compliance issues. The Commissioner partially allowed the appeal, reducing fines and penalties. Dissatisfied, the appellant approached the Tribunal, arguing compliance with BIS rules and challenging the conclusion of proceedings under Section 11AC(1)(d). The Revenue defended the impugned order.

The Tribunal observed that two show cause notices were issued for the same investigation, leading to separate orders on duty and confiscation/penalty. The adjudicating authority had concluded proceedings under Section 11AC(1)(d) for duty, rendering the separate order on confiscation and penalty redundant. Consequently, the Tribunal set aside the impugned order, declaring the order on confiscation and penalty as without jurisdiction. The appellant was granted consequential benefits.

In conclusion, the Tribunal allowed the appeal, emphasizing the procedural error in issuing separate orders for duty and confiscation/penalty arising from the same investigation. The appellant's compliance with BIS rules and the conclusion of proceedings under Section 11AC(1)(d) were pivotal in overturning the impugned order.