2004 (12) TMI 274 - AT - Central Excise

Summary

Issues:
1. Confiscation of unaccounted alloy steel flats and rounds.
2. Imposition of penalty on the manufacturer.
3. Interpretation of Rule 173Q in relation to unrecorded goods.
4. Application of the principle of clandestine removal.

Analysis:
1. The case involved the confiscation of unaccounted alloy steel flats and rounds by Central Excise Officers during a surprise visit to the factory premises. The Joint Commissioner initially confiscated the goods and imposed a penalty of Rs. 40,000 on the manufacturer. However, on appeal, the Commissioner (Appeals) set aside the confiscation and reduced the penalty to Rs. 2000, citing a previous Tribunal judgment.

2. The Revenue argued that the goods not recorded in the RG-1 register were liable for confiscation and penalty. The Revenue relied on a Tribunal decision in the case of Media Video Ltd. v. CCE, New Delhi, where unaccounted video cassettes were held to be intended for clandestine removal, justifying confiscation and penalty.

3. The manufacturer contended that the unrecorded goods were in a semi-finished state, requiring further processes like annealing and painting before being entered in the RG-1 register. The advocate referred to industry practices and processes from a steel production book to support the claim that certain steps were necessary before considering the goods as fully finished.

4. The Member (T) analyzed the evidence presented by both sides and concluded that there was no proof that the unaccounted goods were intended for clandestine removal. Citing the case of Bhillai Conductors (P) Ltd. v. CCE, Raipur, the Member held that mere non-accountal of goods in the RG-1 register does not warrant confiscation unless there is evidence of intent to evade duty. Since no such evidence was presented in this case, the Commissioner (Appeals) decision to set aside the confiscation was upheld, and the Revenue's appeal was rejected.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by each party, relevant case laws, and the final decision rendered by the Appellate Tribunal CESTAT, New Delhi.