2005 (6) TMI 179 - AT - Central Excise

Summary

Issues: Confiscation of Copper scrap under Rule 173Q(1) of Central Excise Rules, 1944; Imposition of personal penalties on manufacturing unit and individuals; Interpretation of Rule 173Q(1) regarding non-accountal of raw materials.

In this judgment by the Appellate Tribunal CESTAT, Mumbai, the authorities below had confiscated 5350 Kgs of Copper scrap valued at Rs. 4,54,750 under Rule 173Q(1) of Central Excise Rules, 1944, due to the scrap not being found entered in the records during an inspection. Additionally, a redemption fine of Rs. 90,000 was imposed. Personal penalties of Rs. 25,000 on the manufacturing unit and Rs. 5,000 on the second appellant and partner were also levied. The appellants argued that they had the necessary papers and would update their records accordingly, stating that there was no time limit for such entries. However, this defense was rejected by the authorities, leading to the impugned order.

During the hearing, it was observed that the raw material was confiscated based on the assumption of an intention to use it without proper record entry. The appellants contended that confiscation on this ground was not justified. The Tribunal referred to precedents where it was held that non-accountal of raw material alone does not imply duty evasion. The Tribunal also noted that Rule 173Q(1)(b) pertains to the non-accountal of excisable goods manufactured, not raw materials. Citing relevant case laws, it was established that confiscation under this rule does not apply to raw materials. Consequently, the impugned order was set aside, and both appeals were allowed, granting relief to the appellants.

In conclusion, the judgment clarifies the interpretation of Rule 173Q(1) concerning the confiscation of raw materials and emphasizes that the rule is applicable to excisable goods manufactured by the assessee, not to raw materials. The decision highlights the importance of differentiating between raw materials and manufactured goods in excise law while addressing issues of non-accountal and confiscation.