2009 (8) TMI 200 - HC - Central Excise

Confiscation non-accountal of raw material - Commissioner (Appeals) as well as the Tribunal held that there was no provision for confiscation of the raw material and the goods concerning work in progress. - the revenue has not been able to show any provision dealing with confiscation of raw material which has not been accounted. Moreover, it is admitted case of the parties that no cenvat credit was availed on the raw material and goods were held to be non-excisable items - Once no duty is paid then there is no question of availing any cenvat credit on such raw material. Therefore, the revenue s appeal is without any merit and is liable to be dismissed

Summary

Issues:
Confiscation of goods under Central Excise Act, 1944.

Analysis:
The judgment pertains to an appeal filed under Section 35G of the Central Excise Act, 1944 against an order passed by the Customs Excise and Service Tax Appellate Tribunal. The Tribunal upheld the decision of the Commissioner (Appeals) that the Adjudicating Authority did not have the power to confiscate goods worth Rs. 3,12,198 and work-in-progress goods valued at Rs. 7,800. Both the Commissioner (Appeals) and the Tribunal concluded that there was no provision for confiscation of raw material or work-in-progress goods. The final goods and scrap were found in the factory, and there was no evidence of clandestine removal. It was also established that no cenvat credit was taken on the raw material, and the respondent was not a producer but a mere user of the material. Consequently, the goods were not considered excisable under Rule 2(d) of the Central Excise Rules, 1944. The revenue's appeal was dismissed by the Tribunal, leading them to approach the High Court.

The High Court, after hearing the arguments, found no legal question necessitating the admission of the appeal. The counsel for the revenue failed to demonstrate any provision authorizing the confiscation of unaccounted raw material. It was acknowledged that no cenvat credit was claimed on the raw material, and the goods were deemed non-excisable. As duty had not been paid, there was no possibility of availing cenvat credit on such material. Consequently, the appeal was deemed meritless and was dismissed by the High Court. The judgment affirms that in the absence of duty payment and cenvat credit utilization, confiscation of raw material is not permissible under the Central Excise Act, 1944.