2018 (4) TMI 1450 - AT - Central Excise

Confiscation of seized goods - redemption fine - penalty - Held that - the premises of Amba Bi-Wheelers Private Ltd. on the ground that same were bearing the brand name Top and Ninja was not owned by them and had been stocked with intention to remove without payment of duty - The learned Commissioner also accepted the contention of Amba Bi-Wheelers that they were under bona fide belief that they would be covered by the SSI exemption and duty liability has still to surface till the stocks packed before 31 May 2006 were finally exhausted. The learned Commissioner appreciating the law being duly made applicable to packing re-packing was made dutiable with effect from 1 June 2006 prior to that the respondents are merely engaged in trading activity is not amounting to manufacture and these were not aware with the procedures and law governing Central Excise levied on manufactures. As regards penalties on the respondents under Rule 26 the learned Commissioner have observed that for such penalty necessary ingredients that is the knowledge and reasons to believe that the goods which the person had dealt with were liable to confiscation is completely missing in the facts of the case. Further finding was recorded that the Adjudicating Authority have imposed penalty under Rule 26 without there being any evidence on record in support of the allegations that the respondent(s) had knowledge or had reasons to believe that the goods in question were liable for confiscation under the provisions of Central Excise Law. Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Whether the goods repacked/manufactured prior to 01.06.2006 were liable for Central Excise duty.
2. Whether the goods cleared from 01.06.2006 to 03.08.2006 without issuing invoices were dutiable.
3. Validity of confiscation of goods seized from various premises.
4. Imposition of penalties under Rule 26 of Central Excise Rules, 2002.

Detailed Analysis:

1. Liability of Goods Repacked/Manufactured Prior to 01.06.2006:
The Commissioner (Appeals) dropped the demand of ?45,73,247/- based on the audited balance sheet, which showed that the closing stock as of 31.05.2006 was ?1,74,56,998/- (cost price). The goods with MRP of ?3,31,00,448/- were covered by this closing stock. Relying on the Supreme Court decision in CCE, Hyderabad vs. Vazir Sultan Tobacco Co. Ltd., it was held that excise duty was not chargeable on goods repacked/manufactured before 01.06.2006.

2. Goods Cleared Without Invoices from 01.06.2006 to 03.08.2006:
The demand of ?9,80,917/- for goods cleared without invoices was also dropped. The Commissioner (Appeals) found that the goods valued at ?90,38,376/- (MRP) were part of the stock held as on 31.05.2006, thus not dutiable. This decision was again based on the principle established in the Vazir Sultan Tobacco Co. case.

3. Confiscation of Goods:

a. Goods Seized from M/s Amba Bi-Wheelers:
The Commissioner (Appeals) held that out of the seized goods valued at ?3,16,93,424/- (MRP), goods worth ?1,45,43,533/- (MRP) were imported in a duly packed condition and were not liable for excise duty. The remaining goods valued at ?1,71,49,890/- (MRP) were liable for confiscation as they were packed after 31.05.2006. The redemption fine was reduced to ?8,00,000/- and a penalty of ?2,00,000/- was imposed under Rule 25.

b. Goods Seized from M/s Amba Motorcycles:
The Commissioner (Appeals) found that out of the seized goods valued at ?75,92,061/- (MRP), goods worth ?60,84,380/- (MRP) were part of the stock held as on 31.05.2006 and were not dutiable. The remaining stock of ?15,03,027/- (MRP) was entitled to SSI exemption as they did not cross the SSI limit. Hence, the confiscation was set aside.

c. Goods Seized from the Transporter:
The confiscation of goods valued at ?49,349/- seized from the transporter was upheld as it was not challenged by the respondent.

4. Imposition of Penalties:
The penalties under Rule 26 of CER, 2002, were set aside. The Commissioner (Appeals) found that there was no evidence that the respondents had knowledge or reasons to believe that the goods were liable for confiscation. The stocks were duly accounted for, and there was no attempt to remove the goods clandestinely.

Judgment:
The Revenue's appeal was dismissed, and the cross objection filed by the assessee was also dismissed. The findings of the Commissioner (Appeals) were upheld as reasoned and proper, with no impropriety or illegality found in the impugned order.

Pronounced in Court.