2003 (9) TMI 611 - AT - Central Excise

Order set aside, matter remanded for confiscation determination. Penalty upheld, appeal allowed. Decision based on precedent.

The judge set aside the order and remanded the matter to the adjudicating authority to determine the confiscation of goods and the payment of redemption ... Confiscation of unaccounted goods - confiscation after provisional release of seized goods - invocation of Rule 173Q(1)(b) for confiscation - penalty under Rule 173Q(1) - mens rea not required for confiscationConfiscation after provisional release of seized goods - confiscation of unaccounted goods - invocation of Rule 173Q(1)(b) for confiscation - Whether confiscation of seized unaccounted goods can be ordered even though those goods had been provisionally released during adjudication - HELD THAT: - The Tribunal held that confiscation can be ordered notwithstanding provisional release of the seized goods. The adjudicating authority and the Commissioner (Appeals) had refused confiscation solely on the ground that the goods were not available due to provisional release; the Tribunal found that approach legally untenable in view of higher court precedent endorsing confiscation despite non-availability caused by provisional release. The Tribunal further examined challenges to reliance on decisions where confiscation was not sustained and distinguished them on facts: in one line of authorities confiscation was refused because goods were not in finished condition or because non-accountal occurred without mens rea; but the Tribunal accepted the contrary view that Rule 173Q(1)(b) can be invoked and confiscation ordered even where mens rea or intention to evade duty is not established, and where the goods were found to be finished products. As the authorities below overlooked the applicable precedents and their legal principle, the Tribunal set aside the impugned order insofar as it denied confiscation and remitted the matter to the adjudicating authority to decide confiscation and redemption fine afresh after hearing both sides.Impugned refusal to order confiscation set aside; matter remitted to adjudicating authority to pass appropriate order on confiscation and on payment of redemption fine after hearing parties.Penalty under Rule 173Q(1) - Whether the penalty imposed under Rule 173Q(1) on the respondents required interference - HELD THAT: - The Tribunal recorded that the adjudicating authority had imposed a penalty under Rule 173Q(1) (for non-accountal/finished goods) and that that part of the order was affirmed by the Commissioner (Appeals). The respondents did not challenge the penalty order before the Tribunal; consequently that penalty order had attained finality and was left undisturbed by the Tribunal.Penalty under Rule 173Q(1) left unaltered for having become final for want of challenge.Final Conclusion: The Revenue's appeal is allowed insofar as the refusal to order confiscation is set aside; the matter is remitted to the adjudicating authority to decide confiscation and redemption fine after hearing both sides. The penalty imposed under Rule 173Q(1) remains final and undisturbed. Issues:Confiscation of unaccounted goods provisionally released during adjudication proceedings.Analysis:The appeal involved a dispute regarding the confiscation of unaccounted goods released provisionally to the respondents during adjudication proceedings. The adjudicating authority imposed a penalty but did not order confiscation as the goods were not available. However, the appellate judge referred to a Supreme Court judgment in Weston Components Ltd. v. CCE, New Delhi, which stated that even if the seized goods were provisionally released, confiscation could still be ordered during adjudication. The judge found the reasoning of the authorities below legally untenable based on this precedent.The consultant for the respondents cited the case of Friends Wire Industries v. CCE, Chandigarh, arguing that confiscation could not be ordered as the unaccounted goods were not finished goods. However, the judge disagreed, noting that the goods were indeed fully finished and a penalty had been imposed accordingly. The judge distinguished this case from Friends Wire Industries where confiscation was not upheld due to the goods not reaching the finishing stage. Additionally, the judge referenced Flex Industries Ltd. v. CCE, Noida, which held that non-accountal of goods without intent to evade duty did not warrant confiscation. However, the judge emphasized the precedence set by the Bombay High Court in Kirloskar Brothers, which allowed confiscation even without mens rea for non-accountal of goods.Consequently, the judge set aside the impugned order as the authorities had overlooked the precedents set by the Apex Court and the Bombay High Court. The matter was remanded to the adjudicating authority to determine the confiscation of goods and the payment of redemption fine by the respondents. The penalty imposed on the respondents remained unchanged as it was not challenged. The appeal of the Revenue was allowed, and the adjudicating authorities were directed to make a decision after hearing both parties.