2008 (2) TMI 100 - HC - Central Excise

Confiscation on the ground that goods were being removed in a clandestine manner by the assessee without payment of duty & without issuance of any bill or covering document revenue has no case of evasion of duty even when the goods were removed without any covering documents, confiscation & penalty are not justified, if manufacturer SSI has not crossed exemption limit revenue appeal dismissed

Summary

Issues:
Appeal against order under Central Excise Act, 1944 regarding confiscation of stock and imposition of penalty based on exemption limit and duty evasion.

Analysis:
The appeal was filed under Section 35G of The Central Excise Act, 1944, challenging the order passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi. The substantial question of law raised was whether the confiscation of stock and penalty imposition can be justified when a manufacturer falls within the total exemption from duty but is suspected of evading duty through clandestine removal of goods without proper documentation or record-keeping. The case involved the seizure of goods being removed clandestinely without payment of duty and without proper documentation. The assessee argued that being a small scale unit, it was exempt from duty up to a certain limit, and therefore, no duty evasion was involved. The Tribunal, in its order dated 23.12.2004, accepted the appeal, setting aside the confiscation and penalties imposed by the lower authorities.

The Tribunal's decision was based on factual findings that the production of the respondent was below the exemption limit, and there was no case of duty evasion established by the revenue. The Tribunal concluded that the imposition of penalties was unwarranted in the absence of evidence of duty evasion. The appellant-revenue challenged the Tribunal's decision before the High Court. After hearing the arguments and examining the record, the High Court upheld the Tribunal's findings of fact. The High Court found no substantial question of law to interfere with the Tribunal's decision and dismissed the appeal.

In summary, the case revolved around the issue of confiscation of stock and imposition of penalties under the Central Excise Act, 1944, concerning duty evasion suspicions despite the assessee falling within the exemption limit. The Tribunal and subsequently, the High Court, ruled in favor of the assessee, emphasizing the lack of evidence of duty evasion and the assessee's compliance with the exemption limit, leading to the dismissal of the appeal by the High Court.