2009 (9) TMI 865 - AT - Central Excise

Tribunal rules on excise duty evasion, emphasizes evidence and accurate record-keeping

The Tribunal held that goods found unaccounted in a factory cannot be confiscated without proof of intent to evade excise duty. Settlement with the ... Confiscation - the goods found unaccounted in the RG-1 of the respondent - Held that: - The allegation in the SCN that these goods were kept without entering in the records, with an intention to clear the same without payment of excise duty, is not supported by any evidence - the goods once they are in the factory premises, no penalty can be imposed on the respondent under the provisions of Rule 173Q. The goods once they are in the factory premises, no penalty can be imposed on the respondent under the provisions of Rule 173Q - the goods which were found in excess in the factory premises are not liable for confiscation. The respondents have not entered in the statutory records, which needs to be done by them as provided under the rules. This is a violation of the rules. For this kind of violation, penalty has been provided under Rule 226 of Central Excise Rules, 1944. Appeal allowed - decided partly in favor of Revenue. Issues:Confiscation of unaccounted goods in factory premises, settlement with Settlement Commission, penalty for violation of rules regarding statutory records.Confiscation of Unaccounted Goods:The appeal was filed by the Revenue against the Order-in-De novo, arguing that the impugned order dropped proceedings initiated by a show cause notice for confiscation of goods found in excess and not recorded in RG-1. The Revenue contended that the settlement of one case with the Settlement Commission does not affect the show cause notice for confiscation of unaccounted goods found in the factory premises. The Tribunal analyzed the evidence and held that without proof of intent to evade excise duty, the goods found unaccounted in the factory premises cannot be confiscated.Settlement with Settlement Commission:The respondent had settled a case of clandestine removal with the Settlement Commission. The respondent's counsel argued that the Settlement Commission's decision covered the issue of unaccounted stocks found in the factory premises as well, as both cases originated from the same investigations. Citing precedent, the counsel contended that settling one case precludes allegations in another related case. The Tribunal agreed, stating that settled proceedings cannot be used against the respondent in a separate show cause notice.Penalty for Violation of Rules:While the goods in excess in the factory premises were not liable for confiscation, the Tribunal found a violation of rules as the respondent failed to record correct production figures in statutory records. This violation attracted a penalty under Rule 226 of the Central Excise Rules, 1944, amounting to Rs. 2000. The Tribunal directed the respondent to pay this penalty immediately. The appeal by the Revenue was disposed of accordingly.This judgment clarifies the distinction between settled cases and ongoing proceedings, emphasizing the need for evidence to support allegations of violations. It also underscores the importance of maintaining accurate statutory records to avoid penalties under relevant rules.