2018 (1) TMI 918 - AT - Central Excise

Clandestine removal - excesses of stock - 132 MT of Bloom/Billet - non-accountal of stock in the records - 1158 MT of angles, channels, joist and other goods - Held that - the quantity of 132 MT is roughly one day s production and the explanation is that this would have been accounted but for the relevant documents being withdrawn by the officers - non accountal of this quantity of finished goods can be condemned in the light of the explanation offered by the appellant. In any case, goods were found within the factory and consequently, the confiscation of this quantity of finished products is not justified and hence set aside. As regards angles, channels, joist and other goods (totaling to 1158 MT), the explanation offered by the appellant is that they had installed new machineries in the rolling mills and these goods were produced in the trial run during May 2012 - Held that - There is nothing on record to support the argument that such goods were manufactured in trial run and did not meet the necessary specifications - In the present case, this quantity of finished goods have been manufactured but not accounted in the statutory records. Consequently, the goods are liable for confiscation and appellant will be liable for penalty in terms of Rule 25 of the Central Excise Rules. In the result, confiscation is upheld. Keeping in mind the doctrine of equity, fairness and good conscience, the redemption fine and penalty imposed merits reduction - appeal allowed in part.

Summary

Issues:
1. Confiscation of excess stock of finished goods found during verification.
2. Confiscation of goods under Rule 25 of the Central Excise Rules.
3. Redemption fine and penalty imposed on the appellant.
4. Reduction of redemption fine and penalty.

Analysis:

Issue 1: Confiscation of excess stock of finished goods found during verification
The appellant, engaged in manufacturing M.S. Billet, M.S. Beam, M.S. Channel, etc., had excess stock of finished goods seized during a verification visit by Central Excise Officers. The seized goods were proposed for confiscation under Rule 25 of the Central Excise Rules, 2002. The appellant argued that the excess stock was due to production not being properly accounted for, citing reasons like new technology implementation and misalignment of machines. The Chartered Engineer certified the physical stock as per records. The Tribunal found that the non-accountal of a certain quantity of finished goods was unjustified and set aside the confiscation of such goods.

Issue 2: Confiscation of goods under Rule 25 of the Central Excise Rules
Regarding the confiscation of other goods like angles, channels, joist, and beams, the appellant claimed these were produced during a trial run in May 2012 and did not meet specifications, hence not accounted for. The Tribunal noted that these goods were unaccounted for until July 2012 and were liable for confiscation under Rule 25, as excisable goods are liable for duty upon manufacture. The confiscation of these goods was upheld, and the appellant was held liable for penalty under Rule 25.

Issue 3: Redemption fine and penalty imposed on the appellant
The Commissioner's order imposed a redemption fine and penalty on the appellant, which the Tribunal found excessive. Considering equity and fairness, the Tribunal reduced the redemption fine to &8377; 20,00,000 and the penalty to &8377; 10,00,000.

Issue 4: Reduction of redemption fine and penalty
In light of the above analysis, the Tribunal modified the impugned order, reducing the redemption fine and penalty imposed on the appellant. The appeal was partly allowed, with the modified redemption fine and penalty amounts. The judgment was pronounced on 19.01.2018.