2017 (1) TMI 1126 - AT - Central Excise

Tribunal overturns confiscation of goods due to procedural error, penalties reversed

The Tribunal set aside the confiscation of goods valued at Rs. 70,11,835 under Rule 25 of the Central Excise Rules, 2002 and Rule 15 of Cenvat Credit ... Clandestine removal - goods not accounted for in daily stock register - confiscation - penalty u/r 15 - SCN issued without any demand of duty - Held that: - reliance placed in the case of Commissioner of C.Ex., Delhi-II vs Ganpati Rollings Pvt. Ltd. [2016 (6) TMI 157 - DELHI HIGH COURT], where there was proposal for imposition of penalty under Rule 25 of Central Excise Rules, 2002 and there was no proposal for demand of duty and there was no invocation of said Section 11AC. This Tribunal had found that if Section 11AC was not invoked then Rule 25 of Central Excise Rules, 2002 was not invokable. I find that the said ruling is squarely applicable in the present case. The impugned show cause notice is not sustainable - appeal allowed - decided in favor of appellant. Issues:- Confiscation of goods under Rule 25 of Central Excise Rules, 2002 and Rule 15 of Cenvat Credit Rules, 2004- Imposition of penalties and redemption fine- Appeal against Order-in-Appeal No.NOI/EXCUS/000/APPL/159/2014-15Confiscation of Goods:The case involved the confiscation of goods valued at Rs. 70,11,835 under Rule 25 of the Central Excise Rules, 2002 and Rule 15 of Cenvat Credit Rules, 2004. The appellant argued that certain seized goods were purchased from another unit with proper invoices and that semi-finished goods were not yet complete, hence not required to be entered in the daily stock account register. The Original Authority upheld the confiscation and imposed penalties and a redemption fine. The Commissioner (Appeals) also upheld the decision. The Tribunal, however, found that the show cause notice lacked any demand for duty, making the invocation of Section 11AC of the Central Excise Act, 1944 irrelevant. Citing a ruling by the Hon'ble High Court of Delhi, the Tribunal concluded that without the demand of duty, Rule 25 of the Central Excise Rules, 2002 was not applicable. Therefore, the Tribunal set aside the Order-in-Original and Order-in-Appeal, directing the Original Authority to refund the encashed bank guarantee amount.Imposition of Penalties and Redemption Fine:The penalties imposed under Rule 25 of the Central Excise Rules, 2002 and Rule 15 of Cenvat Credit Rules, 2004, along with the redemption fine, were contested by the appellant. They argued that there was no irregularity in the availment of Cenvat Credit, thus penalties under Rule 15 were unwarranted. The Tribunal, after considering the arguments and the absence of a demand for duty in the show cause notice, held that the penalties and the redemption fine were not sustainable. Relying on a previous ruling, the Tribunal set aside the penalties and directed for the refund of the encashed bank guarantee amount.Appeal Against Order-in-Appeal:The appellant appealed against the Order-in-Appeal No.NOI/EXCUS/000/APPL/159/2014-15 dated 19.09.2014, where the Commissioner (Appeals) upheld the Order-in-Original. The Tribunal, after detailed analysis and consideration of legal precedents, allowed the appeal, setting aside both the Order-in-Original and the Order-in-Appeal. The Tribunal directed the Original Authority to refund the amount realized through the encashment of the bank guarantee. The appeal was allowed with consequential relief as per law.