1996 (11) TMI 144 - AT - Central Excise

Summary

Issues: Confiscation of goods for alleged clandestine removal without payment of duty, non-availability of staff leading to non-entry of goods in RG 1, prescribed checks for entry in RG 1 not completed before confiscation.

In the present case, the appeal before the Appellate Tribunal CEGAT, New Delhi arose from an order by the Commissioner of Central Excise (Appeals), Allahabad, which upheld the confiscation of 137 pieces of Fly Wheel Magnetos by the Assistant Commissioner. The Assistant Commissioner had allowed redemption of the goods on payment of a fine and imposed a penalty. The goods were confiscated on the grounds of suspected clandestine removal without duty payment, as they were found in the appellants' factory without entry in the RG 1. The appellants explained the non-entry by citing the unavailability of staff due to curfew and disturbances in the city. However, the Department rejected this explanation, considering it belated, and proceeded with the confiscation based on the assumption that the goods were intended for clandestine removal.

During the proceedings, it was revealed that there was no prescribed RG 1 stage for the type of goods in question, and entry in RG 1 was to be made after completion of specified checks. The Commissioner (Appeals) had previously directed a re-examination of the RG 1 stage requirement for similar goods seized in the past. As no specific RG 1 stage was prescribed for Fly Wheel Magnetos, it was crucial for the Department to ascertain whether the necessary tests had been conducted on the seized goods before confiscation. The Tribunal noted that the Department failed to verify if tests like Magnetisation, Coliberating, and Testing had been completed on the 137 pieces seized. Without this verification, the Department's decision to uphold the confiscation solely based on the timing of the appellants' explanation and the unavailability of staff was deemed insufficient to prove clandestine removal conclusively.

Ultimately, the Tribunal set aside the confiscation and penalty, overturning the impugned order and allowing the appeal. The Tribunal concluded that the Department had not met the burden of proving clandestine removal due to the lack of sufficient evidence to support the charge. The decision emphasized the importance of verifying prescribed checks and tests before confiscating goods suspected of clandestine activities, especially in the absence of a specified RG 1 stage for the goods in question.