2018 (3) TMI 96 - AT - Central Excise

Clandestine removal - excess stock - Ceramic Glazed Floor Tiles - goods not accounted in the RG-1 register - Held that - In the Panchnama as well as in the statement though it has been recorded that these goods were found in excess, however nowhere the appellant nor the representative has admitted to have stored this excess quantity of goods meant to be cleared clandestinely without payment of duty, nor any evidence in this regard brought on record by the Revenue. Penalty u/s 11AC - Held that - in absence of suppression of facts, mis-declaration etc. penalty cannot be confirmed under the said Provision - penalty set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confiscation of excess stock of finished goods.
2. Imposition of penalty under Section 11AC of Central Excise Act, 2002.

Confiscation of Excess Stock of Finished Goods:
The case involved an appeal against an order proposing confiscation of excess stock of Ceramic Glazed Floor Tiles found unaccounted in the appellant's factory during a visit. The appellant argued that the excess goods were a mistake and not intended for removal without payment of duty. The appellant contended that there was no evidence to prove clandestine removal. The appellant cited a judgment of the Hon’ble Gujarat High Court to support their argument. The appellate tribunal noted that although the excess goods were found, there was no admission or evidence of storing them for clandestine removal without duty payment. Referring to the judgment of the Hon’ble Gujarat High Court, the tribunal concluded that confiscation was not warranted in the absence of evidence supporting clandestine removal.

Imposition of Penalty under Section 11AC of Central Excise Act, 2002:
The appellant was also penalized under Section 11AC of the Central Excise Act, 2002. The appellant argued that since there was no suppression of facts or mis-declaration, and no other penal provision was invoked in the Show Cause Notice, the penalty was not justified. The tribunal agreed with the appellant, stating that in the absence of suppression of facts or mis-declaration, the penalty under Section 11AC could not be confirmed. As no other penal provision was invoked, the tribunal held that no penalty was imposable on the appellant. Consequently, the tribunal set aside the impugned order and allowed the appeal.

In summary, the appellate tribunal ruled in favor of the appellant, setting aside the order proposing confiscation of excess goods and the penalty imposed under Section 11AC of the Central Excise Act, 2002. The tribunal emphasized the lack of evidence supporting clandestine removal of goods and the absence of suppression of facts or mis-declaration to justify the penalty. The decision was based on legal arguments presented by both parties and references to relevant judgments.