2001 (1) TMI 128 - AT - Central Excise

Summary

Issues:
1. Validity of the show cause notice issued by the Commissioner after the expiry of six months from the date of seizure of goods.
2. Classification of seized goods as finished or semi-finished and their entry in the RG. 1 Register.
3. Invocation of Rule 173Q for non-accountal of goods in the RG. 1 Register.
4. Lack of evidence to prove intention to evade payment of duty.
5. Legal implications of a time-barred show cause notice on proceedings against the appellants.

Analysis:

1. The first issue raised in the appeals pertains to the validity of the show cause notice issued by the Commissioner after the expiry of six months from the date of seizure of goods. The appellants argued that the notice was time-barred and should have been dropped on that ground alone. The absence of allegations of fraud or collusion further weakened the legal basis for the proceedings initiated based on the time-barred notice.

2. The second issue revolves around the classification of the seized goods as finished or semi-finished and their entry in the RG. 1 Register. The Commissioner had described the copper strips as finished goods, leading to the confiscation order. However, the panchnama clearly indicated that the goods were semi-finished, which did not necessitate their entry in the RG. 1 Register until they reached the finished stage for marketing purposes. The misinterpretation of facts by the Commissioner led to an incorrect assumption regarding the nature of the seized goods.

3. The third issue concerns the invocation of Rule 173Q for the non-accountal of goods in the RG. 1 Register by the appellants. The Tribunal highlighted that the rule could not be legally invoked against the appellants for failing to record semi-finished goods, as the entry in the register was only required when the goods reached the finished stage for marketing. The lack of intention to evade duty further weakened the application of Rule 173Q in this case.

4. The fourth issue addresses the lack of evidence to prove any intention on the part of the appellants to evade payment of duty. The Tribunal cited a previous case to emphasize that Rule 173Q requires mens rea, and mere non-accountal of goods without evidence of intent does not warrant confiscation. The absence of intention to evade payment of duty further supported the appellants' case.

5. The final issue analyzed the legal implications of a time-barred show cause notice on the proceedings against the appellants. Given the absence of fraud, collusion, or wilful misstatement in the notice, the Tribunal concluded that the proceedings initiated based on the time-barred notice could not be legally sustained. Consequently, the impugned order of the Commissioner was set aside, and both appeals of the appellants were accepted with any consequential relief permissible under the law.