2020 (1) TMI 669 - AT - Central Excise

Clandestine removal - Copper Ingots - In the case of M/s Shivam Metal and M/s Vasudev Udyog and in case of Mayank Metal goods were removed from the factory and they were en-route to M/s Sandeep Manufacturing Strips. Goods confiscated and duty demanded in respect of M/s Mayank Metal - HELD THAT - In case of M/s Mayank Metal it was proposed that the goods which were removed from the factory and wereen-route to M/s Sandeep Manufacturing Strips were proposed to be confiscated. It was also stated that duty of ₹ 84,046/- was paid on the said goods and the said amount was proposed to be appropriated - From the pleadings and on perusal of record, it is noted that the said duty was paid by the appellant during the normal course of business and the goods were also reflected in their ER-1 return. The said return was also filed before the issuance of said show cause notice - Once the goods are reflected in ER-1 return and duty liability on the same has been accepted then even if the duty is not paid on the due date the recourse available with revenue is to resort to provision of Section 11 of Central Excise Act, 1944 and recover duty with interest and such goods do not become contravening goods and there is no provision in Central Excise Law to confiscate the goods which are not contravening goods - the impugned order in so far as the same is in respect of M/s Mayank Metal is set aside. Goods confiscated and duty demanded in respect of M/s Shivam Metal and M/s Vasudev Udyog - HELD THAT - All the goods which were confiscated were still within the factory and they had not been cleared from the factory. In case some goods are found in the factory which are in excess of the book balance then the provisions are that the manufacture is made to record the excess finished goods in his RG-1 register so that the goods suffer Central Excise duty on clearance. When the goods have not been removed from the factory without payment of duty they do not become contravening goods and the same are not liable for confiscation - The Original Adjudicating Authority should have directed the appellant to record the excess found finished goods in RG-1 register so that they suffer duty on their clearance. The goods were in the present case still within the factory and therefore, they were not liable for confiscation. Therefore, the impugned order in respect of goods belonging to M/s Shivam Udyog and Vasudev Udyog is set aside with directions to the respective appellants to record the said goods in their RG-1 register if already recorded in RG-1 register cleared as payment of appropriate Central Excise duty then no action to be taken. In case of M/s Vasudev Udyog raw materials were also confiscated. Central Excise Act deals with the manufacture and so long as the goods are not manufactured the Central Excise duty is not due on the same.The authorities under Central Excise Act do not have power to seize and confiscate the raw material. Therefore, confiscation of raw material belonging to M/s Vasudev Udyog is also set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confiscation of goods en-route to another entity.
2. Confiscation and duty demand for goods within the factory premises.
3. Confiscation of raw materials.

Analysis:
1. The judgment dealt with three appeals arising from a common impugned order regarding the confiscation of goods en-route to a manufacturing entity. Revenue had conducted investigations revealing the supply of Copper Ingots to the manufacturing entity by the appellants. The impugned order confiscated goods en-route and proposed duty appropriation. However, the duty was paid during the normal course of business, reflected in ER-1 return before the show cause notice. The Tribunal held that duty payment acceptance and the absence of contravention precluded confiscation, setting aside the order for one appellant.

2. Regarding the confiscation and duty demand for goods within the factory premises, it was noted that the goods were not cleared and remained within the factory. The law requires recording excess finished goods in the RG-1 register for duty payment upon clearance. Since the goods were within the factory and not contravening, confiscation was deemed improper. The Tribunal set aside the order for the appellants with directions to record goods in the RG-1 register and clear them with appropriate duty payment. Additionally, confiscation of raw materials was addressed, emphasizing that Central Excise Act does not authorize seizure and confiscation of raw materials. Thus, the confiscation of raw materials belonging to one appellant was also set aside.

3. Consequently, the impugned order was set aside, and all three appeals were allowed. The appellants were granted consequential relief as per the law. The judgment clarified the legal principles governing confiscation in cases of goods en-route, within factory premises, and raw materials, ensuring compliance with Central Excise laws and due process.

Conclusion:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD addressed issues of confiscation of goods en-route, within factory premises, and raw materials, emphasizing compliance with Central Excise laws and due process. The decision set aside the impugned order, providing detailed reasoning for each appellant's case and granting consequential relief where applicable.