2013 (10) TMI 721 - AT - Central Excise

SSI exemption - Contravention of CE Rules Non-accountal of Raw Material No statutory obligation to maintain accounts of production and clearance - Held that - The clearances during the financial year were not even required to file a declaration, which is required when the clearances cross Rs. 90,00,000/-, that registration is required when the clearances cross Rs. 1.3 crores, that since on the date of the officers visit, the appellants unit was not even declarant unit - they were not even required to maintain the statutory records thus for non-accountal of the raw material and the finished goods, there is no contravention of Central Excise Rules so as to attract confiscation of goods and penalty - Relying upon Dayal Industries vs. CCE, Delhi - II 2006 (4) TMI 12 - CESTAT, NEW DELHI . Waiver of Pre-deposit Held that - The only basis for confiscation of the goods is that the appellant were required to maintain the statutory Central Excise records and the seized goods were not accounted for - It is well settled that a unit, which is well within the SSI exemption limit and is not even required get registered with Central Excise, is not required to maintain statutory Central Excise records and no penalty can be imposed for non-accountal of the excisable goods - Though the learned Jt. CDR pleads that the appellant were not eligible for SSI exemption as their clearances were required to be clubbed with the clearances with the other group units, in the show cause notice, there was no such allegation - the appellant have a strong prima facie case - the requirement of pre-deposit of penalty is waived for hearing of their appeals and recovery stayed till the disposal of the appeal - stay granted.

Summary

Issues:
Confiscation of goods and penalty imposed on a SSI unit for non-accountal of raw material and finished goods during a Central Excise officers' visit. The appeal challenges the order-in-original confiscating seized goods and imposing penalties.

Analysis:
The judgment revolves around the confiscation of goods and penalties imposed on a SSI unit during a Central Excise officers' visit. The appellant, engaged in manufacturing locks and ignition switches, along with two other group units, faced confiscation of seized goods valued at Rs. 9,05,590/- with an option for redemption on payment of a fine of Rs. 2,00,000/-, and a penalty of Rs. 20,000. The Commissioner (Appeals) enhanced the penalty to Rs. 65,000 but set aside the confiscation of raw material. The appellant challenged this decision, emphasizing that they were not required to maintain statutory Central Excise records as their clearances were well within the SSI exemption limit. The appellant argued that since they were not obligated to file a declaration or maintain records due to their clearances being below the threshold, there was no contravention of Central Excise Rules to warrant confiscation and penalties.

The appellant's counsel cited Tribunal judgments supporting the position that units within the SSI exemption limit and not required to register with Central Excise are not obligated to maintain statutory records, thus precluding penalties for non-accountal of excisable goods. The appellant's strong prima facie case was based on the fact that their clearances were below the threshold requiring registration, and there was no allegation of clearances being clubbed with other group units in the show cause notice. Consequently, the requirement of pre-deposit of penalty was waived for the appeal hearing, and recovery of penalties stayed pending appeal disposal. The judgment highlighted the importance of adherence to statutory requirements and the applicability of SSI exemption limits in determining obligations under Central Excise laws.

In conclusion, the judgment provides a detailed analysis of the legal principles governing the confiscation of goods and imposition of penalties under Central Excise laws, emphasizing the significance of compliance with statutory requirements and the implications of SSI exemption limits on obligations related to maintaining records and accountability for excisable goods.