2006 (2) TMI 570 - AT - Central Excise

Court overturns copper coil confiscations, citing lack of evidence and procedural flaws

The court set aside the confiscation of copper coils under Rule 173Q of the Central Excise Rules in two appeals. The confiscations were deemed unjustified ... Confiscation and penalty Issues:1. Confiscation of copper coils under Central Excise Rules.2. Alleged violation of central excise rules.3. Justification of confiscation and penalty.4. Applicability of specific provision of law for confiscation.Issue 1: Confiscation of copper coils under Central Excise RulesThe judgment involves two appeals directed against the same order regarding the confiscation of copper coils under Rule 173Q of the Central Excise Rules. The first appeal, E/2762/04-NB-SM, pertains to the confiscation of eight coils of copper rods, while the second appeal, E/4066/04-NB, is about the confiscation of three coils found in the factory of the appellant, M/s. Dinesh Industries.Issue 2: Alleged violation of central excise rulesIn the first appeal, the appellant, M/s. Translam Ltd., argued that the confiscation of the copper coils was unwarranted as there was no violation of central excise rules. The appellant contended that the copper coils were purchased from a verified source, M/s. Birla Copper, and sold to M/s. Dinesh Industries with proper documentation, even though the invoices were not dispatched along with the consignments. The appellant's position was supported by statutory records and verification with the buyer, M/s. Dinesh Industries, confirming the sale. The appellant argued that the confiscation was unjustified and relied on legal precedents to support the contention that the order would not be sustainable if a specific provision of law was not invoked.Issue 3: Justification of confiscation and penaltyThe Departmental Representative (DR) contended that the goods should have moved along with the dealer's invoices and that the sale to M/s. Dinesh Industries lacked supporting evidence, justifying the confiscation. However, the evidence on record supported the appellant's explanation of the sale, with entries in statutory records and confirmation from the buyer. It was established that there was no duty evasion, and the proceedings were initiated without specifying the sub-rule under which the action was taken. Consequently, the confiscation of the copper coils and the imposition of penalties were set aside in favor of the appellant.Issue 4: Applicability of specific provision of law for confiscationRegarding the second appeal by M/s. Dinesh Industries, the confiscation of three coils and the penalty imposed were challenged based on the verification of stock in the factory. The appellant explained that the discrepancy in stock was minimal and did not indicate any duty evasion. The court found no offense in the minor variation of stock, especially in weight-accounted commodities, and concluded that the confiscation and penalty were not justified as they can only arise upon evasion of duty. The impugned order was set aside, and the appeal was allowed with consequential relief to the appellant.In conclusion, the judgment addressed the issues of confiscation under Central Excise Rules, alleged violations, justification of confiscation and penalties, and the requirement of specifying the sub-rule for taking action. The decision favored the appellants in both appeals, setting aside the confiscations and penalties due to lack of evidence of duty evasion and procedural shortcomings.