2012 (12) TMI 224 - AT - Central Excise

Unaccounted goods seizure Held that - Non-accountal of excisable goods produced by a manufacturer in the prescribed RG-I register is contravention of the provisions of Rule 10 of the Central Excise Rules, which attracts confiscation of the unaccounted goods and penalty on the manufacturer under Rule 25(1)(b) ibid. Therefore, the unaccounted goods under seizure have been correctly ordered to be confiscated and penalties have been correctly imposed on the appellant company and its Directors. However, looking to the fact that appellant company had gone to the Settlement Commission and have discharged the duty liability as determined by the Settlement Commission, the redemption fine is reduced

Summary

Issues:
Manufacturing unit inspection leading to seizure of goods, confiscation order, penalty imposition, appeal against order-in-original upheld by Commissioner (Appeals), jurisdiction of Single Bench, Settlement Commission settlement, non-entry of goods in RG-I register, duty evasion allegation, confiscation of unaccounted goods, penalty imposition on company and directors, reduction of redemption fine and penalties.

The case involved the appellant, a manufacturer of insulated wires chargeable to central excise duty, whose manufacturing unit was inspected by Central Excise Officers, leading to the discovery that statutory central excise records were not available at the factory. Subsequently, the Production Register and raw material register were found at the Head Office, revealing that finished goods in the factory were not recorded in the RG-I Register. This resulted in the seizure of goods and the issuance of an order by the jurisdictional Asstt. Commissioner for confiscation of the seized goods valued at Rs. 19,19,633, with an option for redemption on payment of a fine and imposition of penalties on the company and its directors. The Commissioner (Appeals) upheld the order-in-original, leading to the filing of appeals and stay applications.

During the hearing, the appellant's Counsel argued that the matters did not involve questions related to duty rates or valuation and fell within the jurisdiction of a Single Bench. However, the bench decided to hear the matters for final disposal with the consent of both parties, waiving the requirement of pre-deposit. The appellant's Counsel contended that a show cause notice alleging duty evasion had been issued against the main appellant, which had been settled by the Settlement Commission. The appeals were against the confiscation of seized goods and imposition of penalties, arguing that the seized goods were not liable for confiscation and there were genuine reasons for the non-entry of goods in the RG-I Register.

The Departmental Representative defended the impugned order by supporting the findings of the Commissioner (Appeals). The Tribunal carefully considered the submissions and records, noting that the statutory records were not present at the factory during the officers' visit and unaccounted goods representing several days' production were not entered in the RG-I register. Given the duty evasion allegation and the Settlement Commission settlement, the unaccounted goods were deemed intended for clandestine removal without duty payment. The non-accountal of excisable goods in the prescribed register contravened Central Excise Rules, leading to confiscation of goods and penalties on the manufacturer. However, considering the Settlement Commission settlement, the redemption fine was reduced to Rs. 1,50,000, and the penalties on the company and its directors were also reduced.

The Tribunal ordered the confiscation of unaccounted goods and upheld the penalties imposed on the appellant company and its directors but reduced the redemption fine and penalties in light of the Settlement Commission settlement. The appeals and stay applications were disposed of accordingly.