2016 (7) TMI 84 - AT - Central Excise

Raw materials/inputs found in excess at the time of search - confiscation and consequently redemption fine and penalty - Held that - As the issue has been settled that the inputs found in excess are not liable for confiscation, therefore, hold that the inputs are not liable for confiscation. As the appellant was not maintaining proper account of their inputs, therefore, the penalty is imposable in view of the decision of this Tribunal in the case of Unimark Remedies Ltd. (2005 (6) TMI 197 - CESTAT, MUMBAI ). In the circumstances, impose penalty of ₹ 5,000/- (Rupees Five Thousand) on the appellant for non accounting of raw materials in the statutory records. With regard to the imposition of penalty on the partner Shri Naresh Joshi, hold that as penalty on the main appellant i.e.M/s Mahadev Steel Industries has already been imposed, therefore, no penalty is warranted on Shri Naresh Joshi.

Summary

Issues:
Appeal against confiscation of raw materials found in excess at the time of search, imposition of redemption fine, and penalty.

Analysis:
The main issue before the Appellate Tribunal was whether raw materials found in excess during a search are liable for confiscation and if redemption fine and penalty can be imposed on the appellant. The Tribunal referred to the case of Unimark Remedies Ltd. vs. CCE, Vapi and held that there is no provision for confiscation of raw materials not entered in records, only a penalty for non-maintenance of records can be imposed. The Tribunal set aside the confiscation but imposed a penalty for non-maintenance of records in the Unimark Remedies Ltd. case.

In a subsequent case of Kashi Laminators (P) Ltd. Vs. CCE, Lucknow, the Tribunal reiterated that there is no provision for confiscation of unaccounted inputs and imposition of penalty for the same. The Tribunal held that confiscation and penalty for non-accounted inputs are not sustainable based on the Unimark Remedies Ltd. case.

The Tribunal concluded that since the issue of confiscation of excess inputs had been settled in previous cases, the inputs found in excess were not liable for confiscation. However, due to the appellant's failure to maintain proper records, a penalty was imposed. The Tribunal imposed a penalty of Rupees Five Thousand on the appellant for not accounting for raw materials in statutory records.

Regarding the imposition of a penalty on the partner Shri Naresh Joshi, the Tribunal held that since a penalty had already been imposed on the main appellant, M/s Mahadev Steel Industries, no additional penalty was warranted on Shri Naresh Joshi. The appeals were disposed of accordingly with the above observations.