2004 (1) TMI 558 - AT - Central Excise

Successful Appeal by Revenue Upheld on Confiscation & Duty Imposition

The appeal from the Revenue challenging the order-in-appeal by the Commissioner (Appeals) regarding the confiscation of seized fabrics, imposition of ... Confiscation, fine and penalty Issues: Confiscation of seized fabrics, imposition of redemption fine, and penalties based on lack of duty paying documents and processing of fabrics without duty payment.In this case, the appeal from the Revenue challenges the order-in-appeal by the Commissioner (Appeals) regarding the confiscation of seized fabrics, imposition of fines, and penalties on the respondents. The search of the shop premises resulted in the seizure of processed manmade fabrics due to the absence of duty paying documents. The subsequent adjudication revealed that the proprietor admitted to getting grey fabrics processed without paying duty, leading to the confiscation of the fabrics and penalties. However, the appeal set aside these decisions. The Revenue failed to provide substantial evidence linking the seized goods to non-duty paid fabrics, essential for confiscation and duty imposition. The liability to pay excise duty rests on the entity conducting the processing work, which the department failed to identify despite available resources. The Commissioner (Appeals) highlighted the necessity of establishing the contraband nature of seized goods before confiscation, emphasizing the lack of legal basis for holding the respondents liable without identifying the actual processor.The show cause notice raised issues concerning the confiscation of seized fabrics, confirmation of Central Excise duty, and imposition of penalties. The Commissioner (Appeals) disagreed with the Revenue's stance, emphasizing the absence of evidence linking the seized goods to non-duty paid fabrics. The onus is on the investigating officers to determine the processing location and possession of processed fabrics. Without concrete evidence, the action of confiscation and duty imposition cannot be justified. The Commissioner (Appeals) stressed the importance of proving the seized fabrics were non-duty paid before holding the traders liable for duty payment. Referring to a Supreme Court decision, the Commissioner highlighted that duty liability lies with the processor, not the trader, necessitating the identification of the actual processor to discharge duty liability. The judgment rejected the Revenue's appeal due to the lack of substantial evidence and failure to counter the established legal principles.The judgment underscores the significance of establishing the contraband nature of seized goods and identifying the entity responsible for processing to determine duty liability accurately. It highlights the necessity of concrete evidence to support confiscation and duty imposition, emphasizing the legal principle that duty liability rests with the processor, not the trader. The judgment rejects the Revenue's appeal, citing the absence of substantial evidence and failure to address the legal basis outlined by the Commissioner (Appeals).