2005 (2) TMI 247 - AT - Central Excise

Summary

Issues:
- Confiscation of excess goods
- Imposition of penalty
- Failure to keep proper accounts
- Excess raw materials
- Justification of findings by lower authorities

Confiscation of Excess Goods and Imposition of Penalty:
The case involved M/s. Rado Industries Limited, a manufacturer of Coated Textile Fabrics, found with excess goods during a visit by Central Excise Officers. The lower authorities concluded that the excess goods were not entered in excise records to evade duty, leading to confiscation and penalty. However, the appellant argued that the goods were produced for Governmental agencies like Indian Railways, with explanations for the discrepancies in accounts due to a family event and transfer of raw materials. The Counsel for the appellant contended that the rejection of explanations was unreasonable, emphasizing the legitimate nature of the production against specific orders. The Tribunal found the confiscation unjustified, considering the goods' intended use for Government orders and the temporary accounting lapse due to a family event, ultimately setting aside the impugned order and allowing the appeals.

Failure to Keep Proper Accounts and Excess Raw Materials:
The appellant's explanations for the discrepancies in accounts, including the failure to enter records due to a family event and the transfer of raw materials from a collapsed shed, were rejected by the lower authorities as belated. However, the Tribunal found these explanations reasonable upon verification, especially given the production against specific orders from Governmental authorities like Indian Railways. The Tribunal noted that the excess goods were a result of the temporary accounting lapse rather than an intention to evade duty, as the goods were produced against legitimate orders. Consequently, the findings and orders of the lower authorities were deemed unjustified, leading to the setting aside of the impugned order and allowing of the appeals.

Justification of Findings by Lower Authorities:
The lower authorities had concluded that the excess goods were intended for clandestine removal without duty payment, based on unaccounted production and inputs. However, the Tribunal disagreed, noting that the goods were specifically produced against orders of Governmental authorities like Indian Railways, with the temporary accounting lapse attributed to a family event. The Tribunal found the confiscation based on clandestine intent unreasonable, as the goods were produced against legitimate orders and bore the monogram of Indian Railways. Ultimately, the impugned order was set aside, and the appeals were allowed based on the lack of justification for the lower authorities' findings and orders.