2017 (11) TMI 1393 - AT - Central Excise

Tribunal overturns confiscation of goods and cash, orders return to appellants

The Tribunal set aside the confiscation of 96MT of CR Strips and Rs. 2,30,000/- in cash, as well as the penalty on the partner. The appellants were ... Clandestine production and removal - CR Strips/Sheets - whether the Learned Commissioner have rightly upheld the confiscation of alleged excess stock, cash seized and rightly imposed penalty on the partner Shri Ashok Kumar Lahoty? - Held that: - the order of confiscation of 96MT of CR Sheets is not sustainable as the capacity of VSSL to manufacture CR Sheets is not established - appellants have led cogent evidence with regard to purchase of the said sheets from other traders, which have been rejected on flimsy grounds without there being any cross verification from the sellers of the sheets. As regards confiscation of cash, the same is not sustainable as appellants had sufficient cash balance on the date of inspection in their cashbook maintained in ordinary course of business - Further, there is no finding by Revenue that the said cash related to any clandestine activity or trading. Personal penalty on the partner Mr. Ashok Kumar Lahoty - Held that: - penalty not sustainable and the same is set aside. Appeal allowed - decided in favor of appellant. Issues Involved:1. Confiscation of alleged excess stock of CR Strips.2. Confiscation of cash seized.3. Imposition of penalty on the partner, Shri Ashok Kumar Lahoty.Issue-wise Detailed Analysis:1. Confiscation of Alleged Excess Stock of CR Strips:The primary issue was whether the confiscation of 96MT of CR Strips valued at Rs. 21,12,000/- was justified. The Revenue alleged that VSSL was evading duty by suppressing production and clandestinely removing CR Strips. During a search, 96MT of CR Strips were seized from the appellant's premises, which were not recorded in the RG-23D Register. The appellant argued that these strips were purchased from various traders and not from VSSL, which lacked the facility to manufacture CR Sheets. The Commissioner, upon remand, examined the definitions of CR Strips and Sheets and concluded that VSSL had the capacity to manufacture CR Sheets. However, the Tribunal found that the capacity of VSSL to manufacture CR Sheets was not established, and the evidence provided by the appellants regarding the purchase of CR Sheets from other traders was rejected on flimsy grounds without cross-verification. The Tribunal concluded that the confiscation of 96MT of CR Sheets was not sustainable.2. Confiscation of Cash Seized:The second issue was the confiscation of Rs. 2,30,000/- in cash, alleged to be the sale proceeds of excisable goods removed clandestinely. The appellants contended that the cash was part of their regular business transactions, as evidenced by their cashbook showing an opening balance of Rs. 2,56,594.27 on the date of inspection. The Tribunal found that the appellants had sufficient cash balance in their cashbook maintained in the ordinary course of business, and there was no evidence linking the cash to any clandestine activity. Therefore, the confiscation of cash was deemed unsustainable.3. Imposition of Penalty on the Partner, Shri Ashok Kumar Lahoty:The final issue was the imposition of a penalty of Rs. 50,000/- on the partner, Shri Ashok Kumar Lahoty. Given the Tribunal's findings that both the confiscation of the CR Strips and the cash were not sustainable, the personal penalty on the partner was also deemed unsustainable and was set aside.Conclusion:The Tribunal allowed the appeals, setting aside the confiscation of 96MT of CR Strips and Rs. 2,30,000/- in cash, as well as the penalty on the partner, Shri Ashok Kumar Lahoty. The appellants were entitled to the return of the seized cash with interest, as per the rules.