2013 (8) TMI 385 - AT - Central Excise

Confiscation of Raw material under Rule 15 of the CCR, 2004 Held that - Under Rule 15 of the Cenvat Credit Rules, the inputs can be confiscated only if wrong Cenvat credit has been availed in respect of the same - There is no finding that the appellant have availed Cenvat credit wrongly in respect of the metalized film and plastic granules Therefore, just for non-accountal of the plastic granules and metalized film as per the provisions of Rule 9(5) of the Cenvat Credit Rules, the same could not be confiscated under Rule 15 and the confiscation order passed is not sustainable. Confiscation of Plastic film, an intermediate product for captive consumption Held that - Appellant admittedly were maintaining its account in the RG-1 register by treating the same as goods manufactured, though for captive consumption - To the extent the stock of plastic film was not accounted for in the RG-1 register, the same would be liable for confiscation. However, looking to the nature of the contravention, the quantum of redemption fine and penalty on the appellant on this count is higher side. Accordingly, the redemption fine is reduced to Rs. 50,000/- and penalty imposed on the appellant-company is reduced to Rs. 20,000/-. Penalty under Rule 26 of the Central Excise Rules, 2002 Held that - Impugned order does not give any finding as to how the provisions of Rule 26 are attracted in the case Shri Umesh Kumar Agarwal, Director as this Rule is applicable in respect of person who knowingly deals with the excisable goods which he knew or had reason to believe are liable for confiscation Decided in favor of Assessee.

Summary

Issues: Confiscation of raw material, Confiscation of plastic film, Imposition of penalties

Confiscation of Raw Material:
The appellant, a manufacturer of printed flexible packing material, faced confiscation of excess stock of plastic granules, metalized film, and printed film during a factory visit. The Jurisdictional Assistant Commissioner ordered confiscation under Rule 25 and Rule 15 of the Central Excise Rules, with redemption fine options. The appellant contended that confiscation was unjustified as no Cenvat credit was taken for the raw material. The Tribunal noted that confiscation under Rule 15 requires wrong Cenvat credit availed, which was not proven. The confiscation of raw material and redemption fines were deemed unsustainable.

Confiscation of Plastic Film:
The plastic film, an intermediate product, was also confiscated under Rule 25. The appellant argued that the film was for captive use and accounted for in the RG-1 register. The Tribunal acknowledged the film as a manufactured product but unaccounted stock was liable for confiscation. Notably, no explanation was provided for unaccounted Cenvat credit on the plastic granules used for the film. The confiscation of plastic film was upheld, but the redemption fine and penalty were reduced due to excessive quantum.

Imposition of Penalties:
The penalty on the appellant-company and its Director was imposed under Rule 26 of the Central Excise Rules. The Tribunal observed that Rule 26 applies to those knowingly dealing with excisable goods liable for confiscation. As no finding indicated the Director's knowledge or belief of liability for confiscation, the penalty on the Director was set aside. Consequently, the penalty on the appellant-company was reduced. The appeal of the Director was allowed, while the appeal of the appellant-company was partly allowed.

This judgment delves into the confiscation of raw material and plastic film, along with the imposition of penalties on the appellant-company and its Director. The Tribunal scrutinized the application of relevant rules, emphasizing the necessity of proving wrongful Cenvat credit for confiscation. The decision balanced considerations of proper account maintenance and accountability for excisable goods, ultimately adjusting redemption fines and penalties based on the nature of contraventions.