2003 (3) TMI 210 - AT - Central Excise

Summary

Issues:
1. Modvat credit availed on certain inputs.
2. Removal of inputs without payment of duty.
3. Liability for confiscation under Rule 51A.
4. Penalty imposition under Rule 210.
5. Confiscation of goods valued at Rs. 30,72,366.
6. Confiscation of plant, machinery, building, etc.
7. Liability for penalty under Rule 209A.

Modvat Credit Availed on Certain Inputs:
The appellant, a manufacturer of Tungsten Carbide products, availed Modvat credit on inputs and faced charges related to the removal of inputs without payment of duty. The Commissioner confirmed a demand for the duty amount already paid by the appellant. However, the Tribunal found that the demand could not be sustained as the amount was paid before the proceedings were initiated. The recovery was deemed to be under Rule 57(i), and no further action was required under the law.

Removal of Inputs Without Payment of Duty:
Regarding the liability for confiscation under Rule 51A of goods valued at Rs. 30,72,366, the Tribunal disagreed with the Commissioner's findings. It was determined that Rule 51A should be interpreted to restrict bringing in excisable goods for trading activities only if they were manufactured and cleared from the factory on payment of duty. As the goods in question were not the final products manufactured at the factory, the liability for confiscation was not upheld.

Liability for Confiscation Under Rule 51A:
The Tribunal analyzed the liability for confiscation and penalty under Rule 210, which provides for a maximum penalty of Rs. 1000 for rule breaches where no other penalty is specified. It was established that the breach must involve non-compliance with the Central Excise Rules without any other penalty provision. Since the department had knowledge of the appellant's activities, and no penalty was imposed under Rule 210, the liability for confiscation was set aside.

Confiscation of Goods Valued at Rs. 30,72,366:
The Tribunal scrutinized the Commissioner's decision to confiscate the goods valued at Rs. 30,72,366 under Rule 210 and found no contravention of Rule 51A. As the inputs were not removed without payment of duty but without reversal of Modvat credit, the Tribunal concluded that the confiscation and penalty imposed were not justified.

Confiscation of Plant, Machinery, Building, etc.:
The Tribunal further examined the confiscation of the appellant's assets under Rule 173Q(2) and ruled that since there was no contravention justifying confiscation, the confiscation under Rule 173Q(2) was unwarranted. The confiscation was set aside along with the redemption fine determined by the Commissioner.

Liability for Penalty Under Rule 209A:
Lastly, the Tribunal addressed the liability for penalty under Rule 209A, which could only be imposed if goods were liable for confiscation. As no goods were deemed confiscable, the liability for penalty under Rule 209A was deemed unsustainable. Consequently, the Tribunal set aside the order and allowed the appeals based on its findings.