2002 (10) TMI 217 - AT - Central Excise

Summary

Issues:
- Appeal against order confiscating seized excisable goods and imposing penalty
- Allegations of non-accountal of finished excisable goods in RG-1 Register
- Interpretation of Rule 173Q(1) regarding confiscation and penalty provisions

Analysis:

1. The appeal before the Appellate Tribunal CEGAT, New Delhi, involved challenging the order of the Commissioner of Central Excise (Appeals) that set aside the confiscation of seized excisable goods and the penalty imposed on the party. The case revolved around the respondents, engaged in manufacturing plywood and allied products, who were found with an excess stock of plywood during a search conducted by Central Excise officers. The original authority had ordered the confiscation of the seized goods with an option for redemption on payment of a fine and imposed a penalty on the party. The Commissioner (Appeals) later set aside the confiscation but upheld a reduced penalty, leading to the Revenue appealing against this decision.

2. During the hearing, the Junior Departmental Representative (JDR) argued that the case fell under non-accountal of finished excisable goods in the RG-1 Register, invoking Rule 173Q(1) for confiscation and penalty without the requirement of mens rea. The JDR cited various Tribunal decisions and contended that the excess goods found were not accounted for in the register, justifying the penalty under the said rule.

3. On the other hand, the counsel for the respondents presented a defense stating that the excess goods were intended for proper accounting in the RG-1 Register and were not meant for clandestine removal. The counsel highlighted the continuous operation of the factory and the routine practice of entries in the register, emphasizing the lack of mens rea in the alleged offense. The respondents' counsel also pointed out a letter submitted to the Central Excise Superintendent as evidence of their operational procedures.

4. The Tribunal examined the submissions and noted the conflicting claims regarding the intent behind the excess goods found in the finishing room. The department alleged clandestine removal, while the respondents asserted the goods were awaiting proper accounting. The Tribunal emphasized the necessity for the department to prove mens rea for invoking Clause (d) of Rule 173Q(1) for confiscation and penalty. As mens rea was not established, the Tribunal held that the order of confiscation and penalty under Rule 173Q(1)(d) was unsustainable, affirming the decision of the lower appellate authority.

5. Ultimately, the Tribunal upheld the reduced penalty imposed by the Commissioner (Appeals) under Rule 226, citing the precedent set in a previous case. The impugned order was affirmed, and the appeal against setting aside the confiscation and penalty was rejected, concluding the legal judgment at the Appellate Tribunal CEGAT, New Delhi.