2010 (6) TMI 242 - AT - Central Excise

Confiscation and penalty- The dispute in the present appeal is as regards confiscation of seized goods and imposition of penalty. The show cause notice was issued, which was adjudicated by the Joint Commissioner confiscating the goods as also imposing penalty upon the respondent. On appeal against the above order, the Commissioner (Appeals) held in favour of the respondent by observing that the Unit I and Unit II cannot be considered to be one factory, inasmuch as they were separately registered under the Central Excise and were working from two independent buildings though located in the same compound. Held that- confiscation of the same by the original adjudicating authority and imposition of penalty were neither justified nor warranted.

Summary

Issues:
- Interpretation of the exemption notification for specified goods under Chapter 39.
- Determination of whether two units operated by the same manufacturer should be considered as separate factories under the Central Excise Act.
- Confiscation of seized goods and imposition of penalty without confirmed duty demand.

Interpretation of Exemption Notification:
The case involved M/s. Pince Plastoware Ltd., engaged in manufacturing plastic household articles, with two units - Unit I and Unit II. Unit I was availing an exemption under Notification No. 5/98-C.E., subject to the condition of not availing duty credit. Unit II, manufacturing plastic moulded furniture, was availing Modvat Credit. The Revenue seized Unit I's final product stock, leading to a show cause notice and penalty imposition. The Commissioner (Appeals) ruled in favor of the respondent, considering Unit I and Unit II as separate factories due to separate registrations and locations. Citing legal precedents, the Commissioner concluded that both units should be treated as independent, justifying Unit I's exemption and Unit II's credit availment.

Factory Distinction under Central Excise Act:
The Commissioner's decision was based on the definition of a factory under the Factories Act and legal judgments, emphasizing the separate identity of Unit I and Unit II. The Revenue appealed, arguing the units should be considered together. However, the Tribunal rejected the appeal, affirming the independent status of the units. The Tribunal highlighted that the dispute focused on seized goods' confiscation and penalty imposition, not duty demand confirmation. It deemed the seizure unjustified, as Unit I had permission to claim the exemption, reflected in their monthly returns. Consequently, the Tribunal dismissed the Revenue's appeal, emphasizing the lack of justification for confiscation and penalty.

Confiscation and Penalty Imposition without Duty Demand:
The Tribunal's decision centered on the unjustified confiscation of goods and penalty imposition without confirmed duty demand. It noted that Unit I had followed the exemption procedure correctly, making the seizure unwarranted. The Tribunal deemed the confiscation and penalty unjustified, leading to the rejection of the Revenue's appeal. The judgment emphasized the importance of following due process and justified actions in excise matters, ultimately upholding the Commissioner (Appeals)'s decision in favor of the respondent.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Ahmedabad, showcases the legal interpretation, factory distinction under the Central Excise Act, and the issue of confiscation and penalty imposition without confirmed duty demand.