2013 (10) TMI 446 - AT - Central Excise

Tribunal Overturns Confiscation Order Due to Lack of Weighment

The Tribunal set aside the order-in-original and order-in-appeal regarding the confiscation of excess stock of finished goods and inputs by the appellant ... Confiscation of the Inputs for non accounting – Held that:- Even if the same were not correctly accounted for in the appellants record, there is no provision for confiscation of such unaccounted inputs under Rule 25 and imposition of penalty on this count - the Tribunal in the case of Unimark Remedies Ltd. vs. CCE, Vapi [2005 (6) TMI 197 - CESTAT, MUMBAI ] - for non-accounted of inputs confiscation of inputs and imposition of penalty is not sustainable - the confiscation of inputs for non-accounted and imposition of penalty is not sustainable. Confiscation of the Finished goods – Held that:- There was no actual weighment, there may be some variation between the estimated weight and the recorded weight and, as such, in my view, the confiscation of finished goods and imposition of penalty on this count - neither the seized inputs nor the seized finished goods are liable for confiscation, there is no justification for penalty under Rule 26 of the Central Excise Rules, 2002 is also not sustainable. There was no excess of stock of inputs finished goods, that the weight of the finished goods as well as inputs has been determined by eye estimation and, as such, there was no weighment, that Tribunals in the case of Hans Metals Pvt. Ltd. vs. CCE, Kanpur [2006 (3) TMI 364 - CESTAT, NEW DELHI ] - confiscation of the alleged excess stock of finished goods is not sustainable, when the weight had been determined by eye estimation without actual weighment, that in any case major portion of the value of the confiscation goods is of inputs in respect of which there is no provision for confiscation - order set aside – Decided in favour of Assessee. Issues Involved:1. Confiscation of excess stock of finished goods and inputs.2. Imposition of redemption fine and penalty.3. Appeal against the order-in-original and order-in-appeal.4. Requirement of pre-deposit for appeal.5. Confiscation and penalty under Rule 26.6. Justification for penalty on the Managing Director.Analysis:1. Confiscation of Excess Stock:The case involved the confiscation of excess stock of finished goods and inputs from the appellant company, a manufacturer of printed plastic laminate rolls and plastic bags chargeable to excise duty. The officers determined the excess stock without actual weighment, leading to discrepancies. The Tribunal highlighted that confiscation based on eye estimation without weighment is not sustainable. The judgment referenced previous cases to support this argument, emphasizing that confiscation without proper provisions is unjustifiable.2. Imposition of Redemption Fine and Penalty:The Assistant Commissioner had ordered the confiscation of the excess stock with an option for redemption on a fine and imposed a penalty on the Managing Director under Rule 26. The Tribunal found the imposition of penalty and redemption fine unjustified due to the lack of proper weighment and provisions for confiscation of unaccounted inputs. The judgment emphasized that penalties should be based on solid legal grounds and upheld by relevant laws.3. Appeal Proceedings:The appellant filed appeals against the original order, which were subsequently upheld by the Commissioner (Appeals). The Tribunal reviewed the arguments presented by both sides, emphasizing the necessity for proper documentation and legal justifications for confiscation and penalties. The judgment highlighted discrepancies in the confiscation process and ruled in favor of setting aside the impugned order.4. Requirement of Pre-deposit for Appeal:The Tribunal waived the requirement of pre-deposit for the appeal filed by the Managing Director, allowing for a comprehensive hearing and final disposal of the case. This decision facilitated a thorough examination of the issues raised by the appellant and ensured a fair review of the entire matter.5. Confiscation and Penalty under Rule 26:The Tribunal scrutinized the application of Rule 26 concerning confiscation and penalties in the case. It emphasized the importance of adherence to legal provisions and precedents to justify any confiscation or penalty imposed on the appellant. The judgment highlighted the lack of proper weighment and legal grounds for the penalties, leading to the decision to set aside the impugned order.6. Justification for Penalty on the Managing Director:The judgment concluded that since the seized inputs and finished goods were not liable for confiscation, there was no justification for imposing a penalty on the Managing Director under Rule 26. The Tribunal emphasized the need for clear legal justifications and adherence to procedural requirements when imposing penalties on individuals associated with the company.In conclusion, the Tribunal's detailed analysis and consideration of legal precedents led to the setting aside of the impugned order, allowing the appeals and stay application to be granted in favor of the appellant company and the Managing Director.