2019 (4) TMI 648 - AT - Central Excise

Clandestine removal - Cigarettes - Currency - absolute confiscation - manufacturer of clandestined cleared goods not identified - retraction of statements - Held that - It is a fact on record that during the course of investigation, some cash and some cigarettes were recovered from Shri Ajay Adwani which were seized. The cash was also seized recovered from the possession of Shri Samaylala Janghel and at that time, statements of both the appellants were recorded, but, these statements were retracted by them and thereafter no statements of the appellants have ever been recorded and no effort were not to investigated the manufacturer of these cigarettes - Unless and until it is identified who is the manufacturer of clandestine cleared the goods, the allegation that the cash recovered from the appellants is sale proceeds of clandestine removed cigarettes is not sustainable. Revenue has failed to establish that who is the manufacturer of clandestine cleared the goods and no duty is sustainable on account of clandestine cleared goods and it is a fact on record that the appellant are not the manufacturer and are only trader, therefore, in the absence of identifying who is manufacturer of goods, it cannot be held that the Indian currency recovered from the possession of the appellants is the sale proceeds of clandestine manufacture and cleared cigarettes. Seizure of Indian Currency - Held that - The Indian currency has been seized under Section 121 of Customs Act, 1962 which were made applicable to Central Excise matters vide Notification No. 68/63-CE dated 04.05.1963, issued under Section 12 of the Central Excise Act, 1944 - he Indian currency can be ordered for confiscation is only in terms of Section 111, 113 and 125 of Customs Act, 1962 which were not made applicable in terms of Notification No. 68/63-CE dated 04.05.1963. Therefore, the Indian currency seized cannot be confiscated under Section 121 of the Customs Act, 1962 - The currency seized is required to be released to the appellants and seized goods cannot be held liable for confiscation - no penalty is imposable on the appellants. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Confiscation of seized goods and Indian currency.
2. Imposition of penalties on appellants.
3. Validity of statements and their retraction.
4. Identification of the manufacturer of clandestinely cleared goods.
5. Applicability of Customs Act provisions to Central Excise matters.

Issue-wise Detailed Analysis:

1. Confiscation of Seized Goods and Indian Currency:
The appellants challenged the confiscation of seized goods and Indian currency, asserting that the confiscation was based on the premise that the goods were clandestinely cleared cigarettes. The Tribunal noted that the seized goods and currency were linked to alleged clandestine activities, but the identification of the manufacturer was not established. The Tribunal emphasized that without identifying the manufacturer of the clandestinely cleared goods, the confiscation of the seized currency as sale proceeds of such goods was unsustainable. Additionally, the Tribunal highlighted that the Indian currency could not be confiscated under Section 121 of the Customs Act, 1962, as the relevant provisions (Sections 111, 113, and 125 of the Customs Act) were not made applicable to Central Excise matters.

2. Imposition of Penalties on Appellants:
Penalties were imposed on various entities, including M/s Rudra Ventures Pvt. Ltd., its director, and the proprietor of M/s Shraddha Traders. The Tribunal set aside the penalties, reasoning that the duty demand on M/s Rudra Ventures Pvt. Ltd. had already been nullified in a previous Tribunal decision. Consequently, the penalties imposed on related parties were also deemed unsustainable.

3. Validity of Statements and Their Retraction:
The appellants retracted their statements soon after they were recorded. The Tribunal observed that no further inculpatory statements were recorded post-retraction. The Tribunal ruled that in the absence of corroborative evidence and subsequent statements, the initial statements (which were retracted) could not substantiate the allegations of clandestine activities.

4. Identification of the Manufacturer of Clandestinely Cleared Goods:
The Tribunal stressed that the identification of the manufacturer of the clandestinely cleared goods was crucial. The investigation failed to establish the manufacturer, and the Tribunal referenced prior decisions where similar charges were dismissed due to lack of evidence identifying the manufacturer. The Tribunal reiterated that without identifying the manufacturer, the allegations of clandestine removal of goods could not be upheld.

5. Applicability of Customs Act Provisions to Central Excise Matters:
The Tribunal clarified that the provisions of the Customs Act (Sections 111, 113, and 125) were not applicable to Central Excise matters as per Notification No. 68/63-CE. The Tribunal noted that Rule 25 of the Central Excise Rules, 2002, which governs confiscation, does not provide for absolute confiscation of excisable goods. Since the appellants were neither producers, manufacturers, importers, nor registered dealers, the confiscation of Indian currency under the Central Excise Rules was deemed inappropriate.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeals filed by the appellants. The confiscation of seized goods and Indian currency was deemed unsustainable, and the penalties imposed were nullified. The Tribunal ordered the release of the seized currency and ruled that no penalties were imposable on the appellants. The judgment emphasized the necessity of identifying the manufacturer in cases of alleged clandestine activities and clarified the inapplicability of certain Customs Act provisions to Central Excise matters.

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