2019 (3) TMI 1045 - AT - Central Excise

Clandestine removal - unaccounted stock of finished goods - truck loaded with detergent cakes of M/s. Maharaja Soaps Industry Pvt. Ltd. present in the premises of M/s. Maharaja Industries without any duty paying documents - allegation on the basis of Mahazar dated 29.3.2011 - admissible evidence or not - Held that - The entire case has been made by the department on the basis of Mahazar dated 29.3.2011 which is purely inadmissible evidence. Further, the Department has not recorded any statement of Mr. R. Prakash, Manager of M/s. Maharaja Industries. Further, the goods which were loaded in the truck parked inside the premises of the appellant had not been removed from the factory and in the absence of removal of goods from the factory the question of payment of duty or issue of invoice does not arise. Further, the reasons given by the appellant for not updating the daily stock account on account of the accident of Mr. Shashikumar who was maintaining the record was not verified by the Department. It is a settled law that power of confiscation does not extend to goods still inside the factory premises and not cleared without payment of duty - it has been held in various cases that confiscation of the goods and imposition of penalty is bad if the goods are not cleared without payment of duty and are still inside the factory - in the absence of any evidence of manufacture and removal of the goods from the factory of M/s. Maharaja Soaps Industries Pvt Ltd without payment of duty, the order of confiscation of goods and penalty is not sustainable. Redemption fine - penalty - Held that - There is no evidence has been brought on record by the Revenue that the Proprietor has deliberately used the vehicle for clandestine removal of the goods. Further, there is no evidence either of the owner or driver of the vehicle having knowledge of the alleged removal of goods without payment of duty and the liability of the said goods for confiscation - In the absence of such cogent evidence, the imposition of redemption fine and penalty is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Confiscation of goods and penalty imposed on M/s. Maharaja Industries, M/s. Maharaja Soaps Industry Pvt Ltd, and M/s. Harita Transport
- Validity of the impugned order passed by the Commissioner (A)
- Allegations of evasion of Central Excise duty based on clandestine removal of goods
- Admissibility of evidence and legal basis for confiscation and penalties

Analysis:

1. Confiscation of Goods and Penalties:
The case involved appeals against an order passed by the Commissioner (A) rejecting appeals of M/s. Maharaja Industries and M/s. Maharaja Soaps Industry Pvt Ltd, and modifying redemption fine and penalty on M/s. Harita Transport. The Department proposed confiscation of goods, redemption fines, and penalties based on alleged evasion of Central Excise duty through clandestine removal of goods. The appellant argued that the goods were seized inside the factory premises and had not been removed, questioning the basis for duty payment and issuance of invoices. The appellant also contested the reliance on the Mahazar as evidence, citing legal precedents to support their argument.

2. Legal Basis and Admissibility of Evidence:
The appellant challenged the admissibility of the Mahazar as the sole basis for the Department's case, highlighting the lack of recorded statements and failure to verify reasons for not updating records. Legal arguments were presented regarding the power of confiscation extending only to goods cleared from the factory without duty payment. The Tribunal emphasized the necessity of concrete evidence to prove evasion and removal of goods without payment, citing relevant case laws to support the decision.

3. Decision and Rationale:
After considering submissions from both parties and examining the record, the Tribunal found the Department's case primarily reliant on inadmissible evidence and lacking substantial proof of evasion or removal without duty payment. The Tribunal set aside the impugned order, emphasizing the legal requirement for concrete evidence to support confiscation and penalties. The decision highlighted the importance of verifying facts and providing admissible evidence in cases of alleged duty evasion and clandestine removal of goods.

In conclusion, the Tribunal's decision focused on the legal basis for confiscation and penalties, emphasizing the need for concrete evidence and adherence to legal procedures in cases involving alleged evasion of Central Excise duty. The judgment underscored the importance of substantiated claims and admissible evidence to support actions such as confiscation and imposition of penalties in excise duty matters.