2014 (4) TMI 295 - AT - Central Excise

Clandestine removal - non accounting of manufactured goods in stock register - Confiscation of goods - Imposition of redemption fine - it is the case of the assessee that goods in question are already duty paid as procured from another party - Held that - exactly same quantity was received by the appellant from M/s Anant Syntex Ltd - the entire movement of the MMF fabrics from M/s Anant Syntex Ltd to the hands of the appellant have been properly recorded and all the documentary evidences were available. Revenue did not agree with the contentions that the said goods were duty paid on the ground that having paid the duty, the goods could not remain in the factory premises. In my considered view, this seems to be very irrational and illogical way of coming to conclusion that the goods are liable for confiscation. The findings of the lower authorities as to the appellant has not cancelled and re-entered the said stock with proper intimation to the Department, cannot be the reason to hold that the goods were liable for confiscation as the confiscation of the goods can be made only if they are non-duty paid or duty liability has not been discharged. - goods are not liable to for confiscation - order set aside - decided in favor of assessee.

Issues:
1. Confiscation of goods without accounting for in the books of accounts.
2. Seizure and confiscation of goods by DGCEI.
3. Discharge of duty liability on the goods.
4. Proper documentation and record-keeping by the appellant.
5. Decision of lower authorities regarding confiscation.

Issue 1: Confiscation of goods without accounting for in the books of accounts
The case involved the confiscation of 6252.68 meters of processed MMF fabrics valued at Rs.4,68,951 that were manufactured and stored in the factory of the appellants without being accounted for in their books of accounts. The goods were intended for being cleared clandestinely, leading to a show cause notice and subsequent adjudication. The lower authorities confirmed the confiscation, imposed a redemption fine, and upheld the penalty on the appellants. However, the Tribunal remanded the matter back to the original adjudication authority for re-verification.

Issue 2: Seizure and confiscation of goods by DGCEI
The DGCEI booked an offence case against the appellants, leading to the seizure of the goods in question. The authorities based their decision on the presumption that the goods were non-Excise duty paid and thus liable for confiscation. The appellant argued that the duty liability was discharged as per the direction of the DGFT authorities, supported by proper documentation and entries in their records. The lower authorities did not consider the discharge of duty liability, leading to the appeal against the confiscation.

Issue 3: Discharge of duty liability on the goods
The appellant received the goods from another entity and discharged the duty liability through proper channels. They maintained records of the receipt of goods, declaration to the authorities, and discharge of duty liability through an invoice and debit entry in the PLA. Despite these actions, the lower authorities concluded that the goods were liable for confiscation due to a perceived failure to cancel and re-enter the stock properly. The appellate authority found these conclusions erroneous and set aside the confiscation order.

Issue 4: Proper documentation and record-keeping by the appellant
The appellant demonstrated proper documentation and record-keeping practices regarding the receipt, declaration, and discharge of duty liability on the goods in question. They had records of the movement of the MMF fabrics, including ARE-1, packing lists, and transport documents. The appellant's compliance with the requirements of law, including recording the goods in registers and seeking de-bonding of the EOU unit, was crucial in establishing the discharge of duty liability.

Issue 5: Decision of lower authorities regarding confiscation
Upon review of the case records and submissions from both sides, the Tribunal found that the lower authorities erred in concluding that the goods were liable for confiscation. The Tribunal noted that the entire movement of the goods was properly recorded, and all documentary evidence indicated the discharge of duty liability. The lower authorities' failure to consider these factors led to an erroneous decision, which the Tribunal set aside, allowing the appeal against the confiscation.

In conclusion, the Tribunal set aside the impugned order, finding it unsustainable and erroneous in confiscating the goods without considering the proper discharge of duty liability by the appellant. The judgment emphasized the importance of proper documentation, record-keeping, and compliance with legal requirements in establishing the legality of goods and their duty status.

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