2003 (11) TMI 134 - AT - Central Excise

Summary

Issues:
1. Confiscation of excess textured yarn not entered in RG 1 register.
2. Application of Rule 173Q for confiscation of unentered yarn.
3. Confiscation of excess finished textured yarn due to unexplained quantity.
4. Rejection of explanation for excess yarn due to anti-static oil.
5. Failure to maintain proper records of anti-static oil consumption.
6. Reduction of penalty imposed on the appellant.

Issue 1: The officers found an excess of textured yarn not entered in the RG 1 register during a visit to a manufacturing unit. The Commissioner ordered confiscation of the goods and imposed a penalty, leading to an appeal. The appellant accepted the failure to enter the yarn in the register but contended that it could have been entered until the next morning. However, the Commissioner found the explanation unreasonable, considering the quantity seized and the daily production rate, leading to the conclusion that the goods were intended for removal without proper entry.

Issue 2: The appellant argued that Rule 173Q should not apply as there was no intent to remove goods without duty payment. However, the Tribunal found the circumstances questionable, with contradictory explanations and unaccounted production indicating an intent to remove the goods. Despite the Commissioner not specifically finding intent, the Tribunal upheld the confiscation under Rule 226, even if Rule 173Q did not apply, based on the circumstances and legal precedent.

Issue 3: An unexplained excess of finished textured yarn was found during stock verification. The appellant attributed this excess to the addition of anti-static oil, but the Commissioner rejected this explanation due to lack of proper records on oil consumption. The appellant's inconsistent data on oil usage and failure to maintain records raised doubts on the explanation, leading to the conclusion that the excess production was not solely due to the oil.

Issue 4: The failure to maintain proper records of anti-static oil consumption was deemed significant, as it indicated a lack of control over raw material usage and production monitoring. The appellant's erratic data on oil consumption and inability to justify discrepancies further weakened the explanation, suggesting an attempt to remove goods without proper accountability.

Issue 5: The Tribunal acknowledged the appellant's intent to remove goods without duty payment based on the unexplained excess production and conduct, as evidenced by statements indicating removal of goods without proper documentation. The penalty imposed was reduced considering the duty amount involved and the potential contribution of anti-static oil to the excess weight of the product.

In conclusion, the appeal was partly allowed, with the Tribunal upholding the confiscation of unentered yarn and excess finished yarn, while reducing the penalty imposed on the appellant. The judgment highlighted the importance of maintaining accurate records, adherence to legal provisions, and the consequences of attempting to remove goods without proper authorization.