2017 (11) TMI 874 - AT - Central Excise

Confiscation - raw material - finished goods - excess of raw material - Held that - only 8908 Mtrs. of Grey Cloth were not entered in statutory records in comparison to the quantity declared by the Respondent in RG23A Part -1, but such excess of raw material were within the factory and the same was not liable for seizure /confiscation under Rule 25 of the Central Excise Rules, 2002. There is no evidence that such non accountal of goods still in the factory was with an intent to evade payment of duty. Confiscation under Rule 25 of the Central Excise Rules, 2002 not attracted on mere non accountal of goods in RG-1 - It is on record that quantity of 179794.9 Mtrs. of Grey Cloth has been ascertained on the basis of figure provided by the Respondent and no actual verification was done by the investigation - demand on the above grounds not sustainable. Redemption fine on raw materials - reduction on quantum of redemption fine - Held that - We do not find any provision in Central Excise Act and Rules made thereunder to confiscate raw-materials. The goods seized at the trading premises and godown of M/s Om Textiles & M/s Sagar Trading Co. were returned to M/s Om Textiles & M/s Sagar Trading Co. by the representatives of Revenue on 13/10/2003. Therefore, we accept the contentions raised by the ld. Counsel for the respondents in respect of this issue. Appeal dismissed - decided against Revenue.

Issues Involved:
1. Confiscation and redemption of raw materials and finished goods.
2. Demand and recovery of Central Excise duty.
3. Confiscation of goods at trading premises and godown.
4. Confiscation of cash seized from residential premises.
5. Imposition of penalties on various individuals.

Detailed Analysis:

1. Confiscation and Redemption of Raw Materials and Finished Goods:
The Tribunal noted that the Commissioner (Appeals) reduced the redemption fine for M.S. Ingots, Poster & Media Paper, and Finished/Processed Man-Made Fabrics. The Revenue's appeal argued that the adjudication order was passed hastily without allowing the main party, M/s L. Kant Paper Mills Ltd., sufficient time to reply. The Tribunal found this argument untenable, emphasizing that raw materials and finished goods within the factory are not liable for seizure or confiscation under Rule 25 of the Central Excise Rules, 2002. The Tribunal cited a precedent from the case of Kashi Laminators Pvt. Ltd., reinforcing that non-accountal of goods within the factory does not indicate an intent to evade duty. Therefore, the Tribunal upheld the reduction of the redemption fine.

2. Demand and Recovery of Central Excise Duty:
The Revenue contested the dropping of the demand for duty on processed fabrics found at the trading premises of M/s Om Textiles and M/s Sagar Trading Co. The Tribunal upheld the Commissioner (Appeals)’s decision, noting that the goods were provisionally released to these entities, acknowledging their ownership. The Tribunal found no evidence to support the Revenue's claim that the goods were non-duty paid and manufactured by M/s L. Kant Paper Mills Ltd. Consequently, the Tribunal upheld the dropping of the duty demand.

3. Confiscation of Goods at Trading Premises and Godown:
The Revenue argued that the confiscation of goods seized at the trading premises and godown of M/s Om Textiles and M/s Sagar Trading Co. was improperly vacated. The Tribunal upheld the Commissioner (Appeals)’s decision, noting that the goods were provisionally released to these entities, and no show cause notice was issued for their confiscation. The Tribunal found no verifiable identification marks on the detained goods to prove their origin. Thus, the Tribunal upheld the decision to vacate the confiscation of these goods.

4. Confiscation of Cash Seized from Residential Premises:
The Revenue contested the vacating of the confiscation of ?7,00,000 seized from the residential premises of Shri Anil Agarwal. The Tribunal upheld the Commissioner (Appeals)’s decision, noting that the Revenue failed to establish a link between the seized cash and the sale proceeds of clandestinely removed excisable goods. The Tribunal emphasized that the explanation provided during the investigation was not found plausible, and the confiscation was based on assumptions and presumptions.

5. Imposition of Penalties on Various Individuals:
The Revenue argued against the dropping and reduction of penalties on various individuals, including Shri Anil Agarwal, Shri Sanjay Agarwal, Shri Suresh Chhabaria, and Shri Laxmi Kant Agarwal. The Tribunal upheld the Commissioner (Appeals)’s decision, noting that there was no contumacious conduct or deliberate violation of the statute. The Tribunal found no specific role of individuals for imposing penalties under Rule 26 of the Central Excise Rules, 2002. Therefore, the Tribunal upheld the decision to drop and reduce the penalties.

Conclusion:
The Tribunal dismissed all the appeals filed by the Revenue, upholding the Commissioner (Appeals)’s decision to reduce redemption fines, drop duty demands, vacate confiscations, and set aside penalties. The respondents were entitled to consequential relief as per law.

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