2023 (12) TMI 114 - AT - Central Excise

Clandestine removal - levy of penalty under Rule 209A of the Central Excise Act, 1944 - alleged active participation in removing and dealing with the goods which they know were liable for confiscation - HELD THAT - This case is, in any case not different from the case where demands have been dropped by the Adjudicating Authority holding the end products as a product of the printing industry. This is the major amount on which in the demand confirmed i.e. total value of the goods as per the table in Para 10.17 is Rs.98,483/-. Nothing has been stated in the impugned order as to why and on what basis invoice value has been changed from Rs 45,501/- to Rs 98,483/- - there are no merit in confirmation of this demand when exact facts in respect of these invoices had not been adduced/adjudicated in the present order. The order in respect of these seven invoices is only made on the basis of surmises and presumptions. The Commissioner has not recorded that the goods that are to be confiscated are excisable goods but he has only expressed his doubt and observed that the unaccounted finished goods are subject to multifarious uses and are leviable to Central Excise duty. In the first part he says these may not be excisable or subject to excise duty as per the facts on record and in the next breath without ascertaining the exact fact and nature of the goods he held them liable for confiscation - It is a settled law that while passing an order for confiscation at least the excisable nature of the goods should have been determined. It is the predetermined mindset of the adjudicating authority whereby he has in respect of these goods without deciding the excisability held the goods to be liable for confiscation. Confiscation cannot be made on the basis of such doubts as expressed by the Commissioner. Thus in the present case the benefit of the doubt which existed in the mind of adjudicating authority should have been extended to the appellant. Order for confiscation and redemption fine needs to be set aside - As demand of duty and order for confiscation are set aside, there are no reason for imposition of penalty under Section 11 AC of the Central Excise Act and these penalties are set aside - As penalties on appellant No.1 is set aside, there are no merit for imposition of penalty on appellant No.2 3 accordingly the same are set aside. Appeal allowed.

Issues Involved:

1. Confiscation of varnished paper.
2. Seizure of un-printed laminated sheets and other items.
3. Confirmation of central excise duty on laminated sheets.
4. Imposition of interest on confirmed duty.
5. Imposition of penalties on the party and individuals.
6. Procedural and evidentiary issues in the adjudication process.

Summary:

1. Confiscation of Varnished Paper:
The Commissioner ordered the confiscation of varnished paper valued at Rs. 2,59,065.50 under erstwhile Rule 173 Q of the Central Excise Rules 1944, with an option to redeem the varnished paper on payment of a redemption fine of Rs. 1,00,000. However, the Tribunal found that the Commissioner did not conclusively determine the excisable nature of the goods, stating, "the unaccounted finished goods are subject to multifarious uses and are leviable to Central Excise duty." The Tribunal held that confiscation cannot be based on doubts and set aside the order for confiscation and redemption fine.

2. Seizure of Un-Printed Laminated Sheets and Other Items:
The Commissioner ordered the vacation of the seizure of un-printed laminated sheets, a three-wheeler, and carton boxes. The Tribunal upheld this decision as no further evidence was presented to challenge the vacation of these seizures.

3. Confirmation of Central Excise Duty on Laminated Sheets:
The Commissioner confirmed the central excise duty on laminated sheets amounting to Rs. 36,081 under Sec. 11A of the Central Excise Act-1944. However, the Tribunal noted that the demand was confirmed based on "conjectures and presumptions" without substantial evidence. The Tribunal found that the invoices in question involved more activities than just lamination, such as "processing," "plates," and "printing," and thus should be considered as products of the printing industry. Consequently, the demand was set aside.

4. Imposition of Interest on Confirmed Duty:
The Commissioner ordered interest at the appropriate rate on the confirmed duty amount under erstwhile Sec 11AB of the Central Excise Act 1944. Since the Tribunal set aside the duty demand, the order for interest was also set aside.

5. Imposition of Penalties on the Party and Individuals:
Penalties of Rs. 36,081 on the party, Rs. 1,00,000 on Sh. Jatinder Shroff, and Rs. 50,000 on Sh. Mukul Mandiratta were imposed under erstwhile Rule 209A of the Central Excise Rules 1944. The Tribunal found no specific findings or evidence to justify these penalties, stating, "No finding has been recorded for imposition of the penalty upon the Appellant No.2 & Appellant No.3." The penalties were set aside as the primary demand and confiscation orders were annulled.

6. Procedural and Evidentiary Issues in the Adjudication Process:
The Tribunal highlighted procedural lapses, such as the lack of detailed examination of invoices and the absence of clear evidence for the nature of work done or raw materials used. The Tribunal emphasized that "confiscation should have been done on the basis of the categorical findings with regards to the excisable nature of the goods," which was lacking. The Tribunal also criticized the adjudicating authority for making decisions based on "surmises and presumptions."

Conclusion:
The appeals were allowed, and the impugned orders for duty demand, confiscation, and penalties were set aside due to lack of substantial evidence and procedural lapses.

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