2017 (6) TMI 208 - AT - Central Excise

Confiscation - penalties - It has been alleged that the appellants procured non-duty paid raw coal and had not paid clean energy cess and central excise duty under the provisions of Clean Energy Cess Rules 2010 and the CEA 1944 - Held that - it is clearly apparent on the face of the record that the appellants purchased the raw-coal without payment of Central Excise Duty and Clean Energy Cess. So the confiscation of the goods from the premises of the purchaser is justified. Penalties - Held that - There is no record that the purchaser had any knowledge that the duty and cess were not paid on the raw-coal. In other words it appears that the appellants purchased the goods under the cover of Central Excise Invoice. So imposition of penalty on the appellants is not justified. Section 34 provides that whenever confiscation is adjudged under this Act or the Rules made thereunder the Officers adjudging it should give the owners of the goods option to pay in lieu of confiscation such fine as the Officer thinks fit. So the Adjudicating Authority should have exercised the discretion to give option to pay fine as provided under Section 34 of the Act 1944 - the Adjudicating Authority is directed to assess the fine in lieu of confiscation under Section 34 of the Act 1944. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Common issues involving non-duty paid raw coal procurement, clean energy cess, central excise duty, confiscation, penalties, and application of Section 34 of the Central Excise Act, 1944.

Analysis:
The appeals involved the procurement of non-duty paid raw coal by the appellants for use in their manufacturing process. The Adjudicating Authority confiscated the coal and imposed penalties for non-payment of clean energy cess and central excise duty. The Commissioner (Appeals) upheld the decision, leading to the appeals before the Tribunal.

The appellants argued that they purchased coal from the open market, assuming it was duty paid. They contended that goods from the open market should be treated as duty paid, and confiscation without offering the option to pay a fine under Section 34 of the Central Excise Act, 1944, was not justified.

The Revenue representative supported the lower authorities' findings, emphasizing the Adjudication Order's key points. After hearing both sides and reviewing the records, the Tribunal considered the central issue of whether the appellants knowingly purchased non-duty paid raw coal.

The Tribunal found that the appellants indeed procured raw coal without paying the required duties and cess. However, there was no evidence of collusion between the purchaser and the producer to evade duties. The Tribunal concluded that while confiscation was justified, penalties on the appellants were unwarranted due to the lack of knowledge regarding the non-payment of duties.

The Tribunal agreed with the appellants' argument that the Adjudicating Authority should have offered the option to pay a fine in lieu of confiscation under Section 34 of the Act. Consequently, the Tribunal modified the impugned orders, setting aside the penalties and directing the Adjudicating Authority to assess fines in place of confiscation under Section 34 of the Central Excise Act, 1944. All appeals were disposed of accordingly.