2018 (5) TMI 868 - AT - Central Excise

Clandestine removal - Revenue entertained a view that 59.20 MT of MS Billets were in excess then recorded balance. Similarly, 25.18 MT of CI scrap was unaccounted in the statutory record - Held that - apart of the fact that the weighment were not done physically in respect of entire stock, inasmuch as there are no inventory available but as per recording in the SCN, the stock taking was done by undertaking weight of one billet and then multiplying it with number of billets available in the factory, there is virtually no evidence to indicate that the same are meant for clandestine removal - the raw material cannot be seized and confiscated as per the settled law - there is no justification for imposition of penalties - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confiscation of excess MS Billets and unaccounted CI scrap during a factory visit.
2. Imposition of redemption fine and penalties under Central Excise Rules.
3. Justification for confiscation and penalties based on evidence and statements.
4. Legal interpretation of the facts by the appellate authorities.
5. Decision on setting aside confiscation and penalties.

Analysis:

1. The issue at hand revolves around the confiscation of excess MS Billets and unaccounted CI scrap during a factory visit. The Central Excise officer visited the factory and found discrepancies in the stock, leading to the initiation of proceedings for confiscation of raw material and final products. The Revenue alleged that the excess stock was not entered in the statutory record with an intention to evade duty.

2. The original adjudicating authority passed an order confiscating the raw material and final products, imposing a redemption fine and penalties under the Central Excise Rules. The appellant was given an option to redeem the confiscated items on payment of a fine. The penalties were imposed as per the provisions of Rule 25 of the Central Excise Rules, 2002, and Rule 15(2) of the Cenvat Credit Rules, 2004.

3. The crucial aspect of the case lies in the justification for the confiscation and penalties based on the evidence and statements provided. The Revenue contended that the excess stock was kept without proper recording to facilitate clandestine removal. However, the evidence presented did not conclusively prove the intention for surreptitious removal, as the physical weighment of the entire stock was not conducted.

4. The Director of the Company accepted the excesses but did not admit to the intentional omission in record-keeping for removal purposes. The Commissioner (Appeals) interpreted the Director's statement to imply malafide intentions, a conclusion not wholly supported by the statement itself. The appellate authorities' interpretation of the facts played a significant role in the decision-making process.

5. Ultimately, the Tribunal set aside the confiscation of the excess stock, citing the lack of conclusive evidence and adherence to settled legal principles. Consequently, the justification for imposing penalties was also deemed unjustified following the annulment of the confiscation. The appeal was allowed, providing consequential relief to the appellant by overturning the penalties and confiscation.