1996 (6) TMI 258 - AT - Central Excise

Summary

Issues:
The issues involved in the judgment are confiscation of seized goods, granting option for release on payment of redemption fine and penalty imposed under Rule 226 of the Central Excise Rules, 1944.

Confiscation of Seized Goods:
The case involved a discrepancy of 7.410 MT of alloy steel found in excess during physical verification, leading to suspicion of clandestine removal to evade excise duty. The General Manager admitted the discrepancy due to employee negligence. The authorities seized the goods under Rule 226 of the Central Excise Rules for contravention of provisions. The Assistant Collector and the Collector confirmed the confiscation and penalty, considering the specific orders from customers for the goods. The appellants disputed the excess and argued against confiscation, citing various judgments. However, the authorities upheld the confiscation based on the discrepancy and manufacturing details.

Imposition of Penalty:
The Learned Advocate for the appellants did not contest the penalty for improper maintenance of records. The penalty of Rs. 2,000 was confirmed for record discrepancies. The appellants argued against the confiscation and penalty, emphasizing the goods were found in the bounded store room and no evidence of clandestine removal existed. They relied on judgments to support their case. The authorities confirmed the penalty but the Learned Advocate contested the confiscation, citing judgments that goods cannot be confiscated if still within the factory premises and not prepared for removal without duty payment.

Judicial Interpretation and Decision:
The Tribunal considered various judgments including Garden Silk Mills, New Polymer Industries, and Pooja Forge Pvt. Ltd. which emphasized that confiscation requires evidence of goods being prepared for removal without duty payment or seized during transportation without proper documentation. The Tribunal set aside the confiscation order based on lack of evidence of clandestine removal attempts and the goods still being within the factory premises. The penalty for record discrepancies was upheld, but the confiscation and redemption fine of Rs. 40,000 were deemed unsustainable. The judgment highlighted the importance of evidence of clandestine removal for confiscation and upheld the penalty while setting aside the confiscation and redemption fine.

Conclusion:
The judgment concluded by setting aside the order of confiscation and granting an option for redemption on payment of Rs. 40,000, as no evidence of clandestine removal was found. The penalty of Rs. 2,000 for record discrepancies was confirmed.