2005 (6) TMI 200 - AT - Central Excise

Summary

Issues:
1. Confiscation of rods and bars without payment of duty and without raising any invoice by SKSR Mills.
2. Imposition of penalties on SKSR Mills, lorry driver, and lorry owner.
3. Confiscation of the vehicle under Section 115 of the Customs Act.

Issue 1 - Confiscation of rods and bars without payment of duty and without raising any invoice by SKSR Mills:
The case involved the interception of a lorry laden with MS bars and rods from the factory of SKSR Mills. The investigation revealed that SKSR Mills had cleared a quantity of rods and bars without raising any invoice or bill, leading to the suspicion that duty was evaded. The original authority ordered confiscation of the goods with a redemption fine and imposed penalties on SKSR Mills under relevant sections of the Central Excise Act and Rules. The first appellate authority set aside one penalty but affirmed the rest. The tribunal found that the confiscation of goods was justified as SKSR Mills had removed them without payment of duty. The penalty under Rule 173Q was set aside based on a precedent where duty was paid before the show-cause notice was issued.

Issue 2 - Imposition of penalties on SKSR Mills, lorry driver, and lorry owner:
The lorry driver was transporting goods liable for confiscation and was aware or should have been aware of the legal implications. The tribunal upheld the penalty imposed on the driver under Rule 209A, as ignorance of the law was not a valid defense. However, the penalty on SKSR Mills under Rule 173Q was set aside due to the payment of duty before the notice. The tribunal found no evidence implicating the lorry owner in the illegal transportation of goods, leading to the setting aside of the confiscation of the vehicle and the associated redemption fine.

Issue 3 - Confiscation of the vehicle under Section 115 of the Customs Act:
The tribunal found that there was no evidence indicating the lorry owner's direct or indirect involvement in the illegal transportation of goods. As per the legal requirement, the owner must have knowledge of the illegal use of the vehicle for confiscation to be upheld. Since this condition was not met, the confiscation of the lorry was set aside, and the redemption fine was vacated.

In conclusion, the tribunal upheld the confiscation of goods by SKSR Mills due to the evasion of duty but set aside penalties based on the timing of duty payment. The penalty on the lorry driver was upheld, while the confiscation of the vehicle and associated fine were revoked due to lack of evidence implicating the lorry owner.