High Court affirms Tribunal's decision on goods confiscation and penalties, duty liability on goods' removal

The High Court upheld the Tribunal's decision that the confiscation of excess stock of goods was unwarranted due to a reasonable explanation for discrepancies in records, emphasizing that duty liability arises upon goods' removal. The penalty on the manufacturing unit for a technical breach was sustained, but the penalty on the Production Engineer was deleted as the responsible person was on leave, and no evidence established the Engineer's duty to make entries. The appeal was dismissed, affirming the Tribunal's rulings on both confiscation and penalties.

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Issues:
1. Confiscation of goods based on discrepancies in records.
2. Reduction of penalty under Rule 25(1) of the Central Excise Rules, 2002.

Confiscation of Goods:
The appellant challenged the order of the Customs Excise and Service Tax Appellate Tribunal regarding the confiscation of excess stock of finished goods and raw materials found at the manufacturing unit's premises. The appellant argued that the excess stock indicated a potential clandestine removal without paying excise duty, justifying confiscation, redemption fine, and personal penalties. However, the respondent provided an explanation for the discrepancy in records, stating that entries were not made due to the concerned person being on leave. The Tribunal found this explanation reasonable and not disproved by evidence, concluding that confiscation was unwarranted. The High Court upheld the Tribunal's decision, emphasizing that the liability to pay duty arises only when goods are to be removed, which had not occurred in this case. Without additional evidence of clandestine intent, confiscation was deemed unjustified.

Reduction of Penalty:
Regarding the penalty under Rule 25(1) of the Central Excise Rules, 2002, the Tribunal sustained a penalty of Rs. 10,000 on the manufacturing unit for the technical breach of not entering goods in the RG-1 Register for three days. The High Court found no legal flaw in this decision. Additionally, the penalty imposed on the Production Engineer was deleted by the Tribunal. The respondent's explanation that the responsible person was on leave and unchallenged supported the deletion of the penalty for the Production Engineer. As there was no evidence establishing the Production Engineer's duty to make entries in statutory records, the Tribunal's decision to remove the penalty was deemed appropriate. Consequently, the appeal was dismissed for lack of a substantial question of law, upholding the Tribunal's order on both the confiscation of goods and the reduction of penalties.

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