2022 (6) TMI 1083 - AT - Central Excise

Clandestine removal - shortage of stock - removal of inputs without payment of duty - appellant have strongly submitted that since they are maintaining the stock of inputs in respect of trading as well as manufacturing, the stock taking was not properly done and therefore, the alleged removal of inputs and the shortage found in the factory was considered one sided as manufacturing stock - HELD THAT - From the reconciliation chart given by the appellant, it appears that after reconciliation of trading and manufacturing stock the difference is not such which was alleged by the department therefore this fact needs to be reconsidered after proper verification. Accordingly, the appeal in case of M/s. CITIZEN UMBRELLA MANUFACTURES LTD. is disposed by way of remand to the adjudicating authority to decide afresh considering the above reconciliation of their stock. Confiscation, redemption fine and penalty imposed by the lower authorities on M/s. S.L. Banthia Textile Industries Pvt. Ltd. and its Director - HELD THAT - Since unit is exempted under SSI and it is not registered, no Central Excise provision is applicable such as maintaining the stock, etc therefore, it cannot be alleged that the appellant have violated any provision of Central Excise Act. Accordingly, the confiscation, redemption fine and penalty imposed by the lower authorities on M/s. S.L. Banthia Textile Industries Pvt. Ltd. and its Director are not sustainable accordingly the same is set aside. The appeal of M/s. CITIZEN UMBRELLA MANUFACTURES LTD. is remanded to the adjudicating authority - Appeals filed by M/s. S.L. Banthia Textile Industries Pvt. Ltd. and its Director Shri Naresh Banthia are allowed - appeal allowed in part and part matter on remand.

Summary

Issues:
1. Confiscation of seized goods and imposition of penalties under Central Excise Rules, 2002.
2. Discrepancy in stock reconciliation for trading and manufacturing units.
3. Applicability of Central Excise provisions on an SSI-exempt unit.

Analysis:
1. The case involved the confiscation of seized goods and penalties imposed under Central Excise Rules, 2002. Investigating officers intercepted a vehicle carrying goods, leading to seizures at two premises. A show cause notice was issued proposing confiscation and penalties. The adjudicating authority upheld the confiscation and penalties, leading to appeals by the appellants. The Commissioner (Appeals) concurred with the original order, prompting further appeals.

2. Regarding the discrepancy in stock reconciliation, the appellant argued that the seized goods were from the trading stock, not liable for confiscation. They presented a reconciliation chart showing differences only in springs. The tribunal observed the reconciliation chart and found that the alleged removal of inputs and shortages might have been due to improper stock taking. As a result, the case of one appellant was remanded for proper verification and reconsideration based on the stock reconciliation.

3. The issue of applicability of Central Excise provisions on an SSI-exempt unit was raised. The appellant argued that being an SSI unit, certain provisions did not apply, leading to improper confiscation, redemption fines, and penalties. The tribunal agreed, setting aside the confiscation, fines, and penalties imposed on the SSI-exempt unit and its director, as no violation of Central Excise Act provisions was found due to the exemption status.

In conclusion, the tribunal remanded one appeal for reconsideration based on stock reconciliation and allowed the appeals of the SSI-exempt unit and its director, setting aside the confiscation, fines, and penalties imposed on them. The judgment highlights the importance of proper stock reconciliation and the impact of exemption status on the applicability of Central Excise provisions.