Tribunal Reduces Fine & Sets Aside Penalty in Chewing Tobacco Confiscation Case

The Tribunal modified the order by reducing the redemption fine and setting aside the penalty on the authorized signatory. The appeals were disposed of in favor of the appellants as only the finished product, chewing tobacco, was liable for confiscation under Rule 25, excluding raw materials or semi-finished goods.

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Issues:
Confiscation of seized goods under Rule 25 of Central Excise Rules, 2002 and imposition of penalties.

Analysis:
The case involved appeals against an order passed by the Commissioner, Central Excise (Appeals), Jaipur, regarding the confiscation of goods and imposition of penalties on the appellants, who were engaged in the manufacture of lime mix chewing tobacco and pouches. The Central Excise officers seized goods from the factory premises of the appellants due to the absence of statutory records. The department issued a Show Cause Notice seeking duty recovery and penalties. The Commissioner (Appeals) upheld the demand, leading to the appeal. The appellants did not contest the duty liability but challenged the confiscation of seized goods, arguing that only finished products could be confiscated under Rule 25, not raw materials or other goods. They also contested the penalty imposed on the authorized signatory under Rule 26, claiming no role in the violation of statutory provisions.

Upon review, the Tribunal found that the RG-1 register was not properly maintained by the appellants, leading to the seizure and confiscation of goods under Rule 25. However, Rule 25 only applies to excisable goods manufactured by the person, excluding raw materials. As the appellants only produced chewing tobacco, the Tribunal concluded that only the finished product could be confiscated under Rule 25. Citing a precedent, the Tribunal determined that raw materials or semi-finished goods cannot be confiscated under Rule 25. Consequently, out of the seized items, only the chewing tobacco was liable for confiscation, with a reduced redemption fine imposed. The personal penalty on the authorized signatory was set aside since the main appellants had already been penalized under Rule 25 for non-maintenance of proper records.

In conclusion, the Tribunal modified the impugned order by reducing the redemption fine and setting aside the penalty on the authorized signatory. The appeals filed by the appellants were disposed of in their favor.

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