2014 (9) TMI 634 - HC - Central Excise

Seizure of goods - Discrepany in RG-1 Register - Held that - fact, that the said goods was not accounted in the R.G.-1 register, is indicative of the fact that there was an attempt of clandestine removal of the goods. Non accountal of goods in the statutory record is a sufficient ground for confiscation. The Tribunal has also found that on an earlier occasion similar discrepancy of the goods not being accounted for in the R.G.-1 register had occurred and the appellant was let off in those cases, but the same mistake was being repeated again and, therefore, if penalty was not imposed, the same mistake would continue to be adopted by the appellant. no proper explanation was given by the appellant as to why the goods could not be accounted for in the R.G.-1 register. The value of the goods found in excess was ₹ 90,17,715/- for which a fine of ₹ 50,000/- and a penalty of ₹ 10,000/- was imposed, which in the circumstances was justified - no proper explanation was given by the appellant as to why the goods could not be accounted for in the R.G.-1 register - Decided against assessee.

Issues: Confiscation of goods for non-accountal in statutory record, imposition of penalty under Section 173-Q of Central Excise Act.

Confiscation of Goods: The appellant, engaged in manufacturing various goods falling under Chapter 72 of the Central Excise Tariff Act, had 89.890 Metric Tons of finished goods seized by Central Excise Officer for being over the recorded balance in R.G.-1 register. The Additional Commissioner confiscated the goods and imposed a fine and penalty. The Commissioner (Appeals) set aside confiscation but maintained penalty, noting lack of proof of clandestine removal due to goods still being on premises. However, the appellate authority upheld the penalty for non-accountal of goods. After a series of appeals, the matter was remitted to appellate authority, which again upheld confiscation citing non-accountal in statutory record as sufficient ground, despite lack of evidence of clandestine removal.

Imposition of Penalty: The appellant appealed to the Customs, Excise and Service Tax Appellate Tribunal, which dismissed the appeal, deeming the confiscation and penalty reasonable. The appellant then approached the High Court under Section 35-G of the Central Excise Act, challenging the penalty under Section 173-Q. The Court observed that non-accountal of goods in the R.G.-1 register indicated a potential clandestine removal attempt. The Court noted a previous instance where similar discrepancies were overlooked, but warned against repeating the mistake. The Court found the penalty justified given the lack of proper explanation for the unaccounted goods, upholding the fine and penalty imposed by the authorities.

Conclusion: The High Court declined to interfere in the impugned order, dismissing the appeal and answering the question of law against the appellant in favor of the department. The Court affirmed the confiscation of goods and the imposition of penalty under Section 173-Q of the Central Excise Act, emphasizing the significance of proper record-keeping and the consequences of non-compliance with statutory requirements in excise matters.

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