2015 (1) TMI 1039 - AT - Central Excise

Non maintenance of proper records - Violation of Rule 10 of the Central Excise Rules 2002 - Confiscation of goods - enhancement of the redemption fine and penalty - malafide intention or suppression of facts or intention to fraud collusion or for contravention of any provisions of Rule / Act or to evade payment of duty - Held that - provisions of Rule 25 of the Rules can be invoked subject to the provisions of section 11AC of the Act. In this case provisions of section 11AC has not been invoked consequently Rule 25 of the Rules are not invokable as held by this Tribunal in the case of BMW Steels Ltd. (2010 (10) TMI 885 - CESTAT NEW DELHI) as well as by Hon ble High Court of Andhra Pradesh in the case of Mahalakshmi Profiles Ltd. (2012 (9) TMI 706 - ANDHRA PRADESH HIGH COURT). In these circumstances the impugned order is liable to be set aside to the extent of confiscation of goods seized and consequential imposing penalty. As it has been noted that the provisions of Rule 25 of CER 2002 are not invokable therefore the confiscation of goods and consequently imposing redemption fine and penalty on the assessee are not warranted. - Decided against Revenue.

Summary

Issues:
Violation of Rule 10 of the Central Excise Rules, 2002 leading to confiscation and penalty, invocation of Rule 25 of the Central Excise Rules without invoking Section 11AC of the Central Excise Act, 1944, discrepancy in maintaining records, confiscation of raw materials, reduction of redemption fine and penalty, charge of clandestine removal of finished goods.

Analysis:
The case involved a search at the factory premises of the assessee, revealing a shortage of raw materials and excess finished goods. A show cause notice was issued, leading to confiscation of raw materials and imposition of redemption fine and penalty. The Commissioner (Appeals) reduced the redemption fine and penalty but held the shortage of raw materials liable for confiscation. The Revenue appealed for enhancing the fine and penalty, while the assessee appealed against the confiscation of goods and imposition of fines.

The learned Counsel for the assessee argued that Rule 25 of the Central Excise Rules cannot be invoked without Section 11AC of the Act, citing precedents. The absence of malafide intention or suppression of facts was noted. The learned AR contended that the intent to evade duty was clear from the show cause notice, justifying confiscation and penalties. However, the Tribunal observed that Rule 25 can only be invoked subject to Section 11AC, which was not done in this case. Therefore, the confiscation of goods and imposition of fines were deemed unwarranted, following precedents and High Court decisions.

In conclusion, the Tribunal allowed the assessee's appeal, dismissing the Revenue's appeal. The judgment emphasized the necessity of invoking Section 11AC before applying Rule 25 for confiscation and penalties, ultimately ruling in favor of the assessee based on legal precedents and statutory provisions.