2018 (6) TMI 318 - AT - Central Excise

Clandestine removal - non-accountal of goods in the registers - 8550 linear meters of gray fabric and 20367 linear meters of semi-finished fabric - Confiscation orders - redemption fine - penalties - whether goods that admittedly, are not finished products were required to be recorded in the registers that are statutorily prescribed? - Held that - There is no allegation that the goods had been clandestinely removed - The instructions of the Central Board of Excise & Customs are intended to ensure that the accounts should be of sufficient scope as to monitor, to deter and to enforce recovery in the event of any illicit clearance. While the goods and semi-finished products of the appellant may not have been so recorded, in the absence of any allegation that such non-accountal was with intent to remove goods clandestinely, there is no scope for confiscation and imposition of penalty under rule 25 of Central Excise Rules, 2002. Confiscation, redemption fine as well as penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to fine for redemption of confiscated goods and imposition of penalty under rule 25 of Central Excise Rules, 2002.

Analysis:

1. The appellant, a manufacturer of 'processed fabric,' was found in possession of unaccounted 'gray fabric' and 'semi-finished fabric.' The appellant argued that only finished products are required to be detailed in the register and that confiscation of goods without notice or hearing is unjust.

2. The appellant contended that there is no provision for confiscation unless goods are removed clandestinely. The Tribunal cited previous judgments to support the appellant's argument, emphasizing that confiscation and penalty under Rule 25 apply to finished goods, not raw materials. The Tribunal set aside the confiscation of raw materials and finished products, reducing the penalty imposed on the appellant.

3. The appellant highlighted the provisions of Central Excise Rules, 2002, mandating record maintenance and circumstances for invoking confiscation and penalties. Citing the decision in Camex International Ltd case, the Tribunal emphasized that non-entry of raw materials in records does not warrant duty payment or confiscation. Penalty under Rule 25 was imposed for non-maintenance of records, with a reduced penalty amount.

4. The Authorized Representative argued that the breach of Chapter 6 of the Manual of Supplementary Instructions led to the penalty imposition. Citing Supreme Court judgments, it was contended that citing a provision incorrectly does not invalidate proceedings. However, the Tribunal found no evidence of clandestine removal of goods and emphasized the importance of maintaining records to monitor and enforce recovery in case of illicit clearance.

5. The Tribunal concluded that since there was no intent to remove goods clandestinely and the non-accountal of goods was not proven to be intentional, there was no basis for confiscation and penalty under Rule 25. The decision was in line with ensuring proper recording of transactions to prevent illicit activities. Consequently, the fine and penalty imposed were set aside, and the appeal was allowed.

This comprehensive analysis of the judgment addresses the issues raised by the appellant regarding the fine for redemption of confiscated goods and the imposition of penalties under the Central Excise Rules, highlighting the legal interpretations and precedents considered by the Tribunal in reaching its decision.