2013 (1) TMI 639 - AT - Central Excise

Tribunal rules in favor of manufacturing unit in goods confiscation case, highlights importance of record-keeping

RANJEET GUPTA Versus COMMISSIONER OF CENTRAL EXCISE. ALLAHABAD

The Tribunal ruled in favor of the manufacturing unit in a case involving the confiscation of goods and penalties for non-entry in the RG-I register. ... Clandestine removal – Confiscation of goods – Unaccounted goods - Non-entry of goods in RG-I register – Intention to evade duty - Appellant is engaged in the manufacture of catenary copper wire – 8 containers of wire were found on the road which is dead end of the road between the two premises of the appellants - whether the non-entry of copper catenary wire in RG-I register was with any mala fide intention Held that:- There is no other evidence to reflect upon the fact that non-entry in RG-I was with any intent to evade duty. The goods were kept outside the factory gate but has nowhere has agreed that the same were meant for clandestine removal. The said copper catenary wire was meant for supplies to railways and as such the clandestine removal of the same is a non-possibility. Therefore, the wire in question is not liable to confiscation for their non-entry in RG-I register. The goods were removed from the factory premises to near the factory gate. Though the same might be on account of constraint of space in the factory premises but fact remains that such removal is not permissible. Admittedly there was violation of provisions of law, though technical. For such violation, appellant is liable to penalty. The goods were kept outside the factory, premises without any intention to evade payment of duty and having already penalised the manufacturing unit for technical violation of rules. Penalty imposed upon him is set aside. Issues:1. Confiscation of goods and imposition of penalty for non-entry in RG-I register.2. Appeal against the order confirming the demand of duty, confiscating the goods, and imposing penalties.3. Justification for penalties imposed on the manufacturing unit and the Managing Director.Analysis:1. The appellant, engaged in manufacturing catenary copper wire, faced proceedings for confiscation of goods and imposition of penalties due to 8 drums of copper wire found unaccounted outside the factory premises. The goods were not entered in the RG-I register, leading to suspicions of clandestine removal. The Managing Director admitted the goods were not registered but explained they were produced the previous day and kept outside due to space constraints, with no permission from Revenue.2. The original adjudicating authority upheld the duty demand, confiscation, and penalties. The appeal to the Commissioner (Appeals) was unsuccessful, leading to the present appeal. The main contention was that the wire required further processing before marketability, intended for railways with no motive for clandestine clearance. The key issue was the intention behind the non-entry in the RG-I register.3. The Tribunal analyzed the circumstances, finding the goods placed outside were between the appellant's premises and no evidence indicated mala fide intent for duty evasion. The absence of raw material discrepancies and the intended use for railways supported the appellant's case. The Tribunal concluded the wire was not liable for confiscation due to non-entry in the register. However, a penalty was imposed on the manufacturing unit for technical violations, reduced to Rs. 10,000, and the penalty on the Managing Director was set aside, considering no justification for a separate penalty.This judgment emphasized the importance of proper record-keeping and the need for clear intentions behind actions to determine liabilities for duty evasion and penalties. The decision provided clarity on the consequences of procedural violations while considering the overall circumstances and intentions of the parties involved.