2013 (8) TMI 499 - AT - Central Excise

Confiscation under Rule 25(a) of the Central Excise Rules, 2002 - Polyfil quilts manufactured by the job workers M/s Sea Rose Exim (P) Ltd. and M/s Anmol Knitters (P) Ltd. The said goods cleared to the appellant without payment of duty under Notification No. 30/2004 dated 09/4/04 which is available to the goods falling under Chapter 63 Held that - Goods, in question, had been cleared by M/s Sea Rose Exim (P) Ltd. and M/s Anmol Knitters (P) Ltd. without payment of appropriate duty, thus, the provisions of Central Excise Rules had been contravened in respect of the same - The goods would be liable for confiscation under Rule 25 (1) (a) of the Central Excise Rules, as for confiscation of the goods under Rule 25 (1) (a), the intention to evade the payment of duty is not required to be proved Decided against the Assessee. Penalty under Rule 26 of the Central Excise Rules,2002 Held that - For imposition of penalty under this rule, there must be evidence on record indicating that the appellant had received those goods knowing very well that the same are liable for confiscation or in other words, the appellant were aware that the goods were correctly classifiable under heading 94.04 and not eligible for exemption but still dealt with those non-duty paid goods There is no evidence in this regard Penalty under Rule 26 is not sustainable Decided in favor of Assessee.

Summary

Issues:
Classification of Polyfil quilts, duty exemption eligibility, confiscation of goods, penalty imposition under Rule 26.

Classification of Polyfil Quilts:
The case involved the classification of Polyfil quilts manufactured by job workers and their duty liability. The goods were cleared without appropriate duty payment, leading to a contravention of Central Excise Rules. The judge upheld the confiscation of the goods under Rule 25(1)(a) as the intention to evade duty payment did not need to be proven in this case.

Duty Exemption Eligibility:
The appellant, a trading premises dealing in textile items, had Polyfil quilts manufactured by job workers who availed full duty exemption under Notification No. 30/2004. However, the department contended that the quilts were correctly classifiable under a different heading and not eligible for the exemption. The dispute revolved around the duty demands from the manufacturers and the confiscation of quilts found with the appellant.

Confiscation of Goods:
After a show cause notice, the Assistant Commissioner confirmed duty demands against the manufacturers and ordered the confiscation of quilts found with the appellant. The Commissioner (Appeals) upheld this decision, leading to an appeal focusing on the confiscation of the seized quilts and the penalty imposed under Rule 26 on the appellant.

Penalty Imposition under Rule 26:
The appellant argued that they were unaware of the duty exemption ineligibility of the quilts cleared by their job workers. The judge noted that for penalty imposition under Rule 26, there must be evidence that the appellant knowingly dealt with non-duty paid goods. Finding no such evidence, the judge set aside the penalty while upholding the confiscation of the goods and redemption fine. The appeal was partly allowed with consequential relief.