2015 (11) TMI 1334 - AT - Central Excise

Excess material found during search in the premises of Job worker - appellant has not recorded the excess goods in their statutory records - contravention of the provisions of Rule 15 of Cenvat Credit Rules, 2004 read with Rule 25 of the Central Excise Rules, 2002 - Confiscation of goods - Imposition of redemption fine and penalties - Held that - On plain reading of the said Rule, the Rule is applicable when the assessee takes Cenvat Credit on inputs/ capital goods. The facts of the case are such that the appellants have not taken cenvat credit on inputs. Therefore, Rule 15 of the Cenvat Credit Rules, 2004 is not applicable to the facts of the case as appellant have not taken any cenvat credit either wrongly or in contravention of the provisions of any Rule. Therefore, I hold that goods in question are not to be held liable for confiscation under Rule 15 of the Cenvat Credit Rules, 2004. - provisions of Rule 25 are attracted if there is violation of provisions of section 11AC of the Central Excise Act, 1944. Provisions of Rule 25 of Central Excise Rules 2002 cannot be invoked for confiscation of the goods in the subject matter as held by this Tribunal in the case of BMW Steels Ltd. (2010 (10) TMI 885 - CESTAT, NEW DELHI) and in the case of Sadashiv Ispat Ltd. (2010 (1) TMI 500 - PUNJAB & HARYANA HIGH COURT). Therefore, I hold that the provisions of Rule 15 of Cenvat Credit Rules, 2004 and Rule 25 of Central Excise Rules, 2002 are not applicable to the facts of cases in hand, consequently, the confiscation of the goods in question is set aside, hence no redemption fine and penalty are imposable on the appellants - Decided in favour of assessee.

Summary

Issues:
1. Confiscation of goods for excess raw material and finished goods.
2. Applicability of Rule 15 of Cenvat Credit Rules, 2004.
3. Applicability of Rule 25 of Central Excise Rules, 2002.

Issue 1: Confiscation of Goods for Excess Raw Material and Finished Goods:
The appellants were job workers engaged in converting copper ingots into copper wire rods. During a search, excess copper ingots and wire rods were found, leading to allegations of non-recording in statutory records and subsequent confiscation, redemption fine, and penalties. Show cause notices were issued, and the appellants challenged the order, arguing that the confiscation was not sustainable. The dispute revolved around the excess raw material and finished goods found during the investigation.

Issue 2: Applicability of Rule 15 of Cenvat Credit Rules, 2004:
The appellant's counsel contended that Rule 15 of Cenvat Credit Rules, 2004, which deals with confiscation and penalties for wrongly utilizing CENVAT credit, was not applicable as the appellants had not taken any such credit wrongly or in contravention of rules. The Tribunal concurred, holding that since no CENVAT credit on inputs was taken, Rule 15 did not apply, and the goods were not liable for confiscation under this rule.

Issue 3: Applicability of Rule 25 of Central Excise Rules, 2002:
The Revenue argued that Rule 25 of Central Excise Rules, 2002, which covers confiscation and penalties for various violations, applied due to the excess goods not being recorded in statutory records. However, the Tribunal found that the adjudicating authority did not establish a violation of section 11AC of the Central Excise Act, a prerequisite for invoking Rule 25. Citing precedents, the Tribunal held that Rule 25 was not applicable in this case. Consequently, the confiscation of goods was set aside, and no redemption fine or penalty was imposed on the appellants.

In conclusion, the Tribunal allowed the appeals, ruling in favor of the appellants due to the inapplicability of Rule 15 of Cenvat Credit Rules, 2004, and Rule 25 of Central Excise Rules, 2002 to the facts of the case. The judgment emphasized the necessity of establishing violations before invoking specific rules for confiscation and penalties, ultimately providing consequential relief to the appellants.