2023 (12) TMI 114 - AT - Central Excise

Appeal succeeds as penalty under Rule 209A quashed due to failure to establish excisability before confiscation

M/s Nutech Packaging Versus Commissioner of Central Excise, Noida, Mr. Mukul Mehndiratta, Manager Versus Commissioner of Central Excise, Noida And Mr. Jatinder Shroff, Director Versus Commissioner of Central Excise, Noida

M/s Nutech Packaging Versus Commissioner of Central Excise, Noida, Mr. Mukul Mehndiratta, Manager Versus Commissioner of Central Excise, Noida And Mr. ... Issues Involved:1. Confiscation of varnished paper.2. Seizure of un-printed laminated sheets and other items.3. Confirmation of central excise duty on laminated sheets.4. Imposition of interest on confirmed duty.5. Imposition of penalties on the party and individuals.6. Procedural and evidentiary issues in the adjudication process.Summary:1. Confiscation of Varnished Paper:The Commissioner ordered the confiscation of varnished paper valued at Rs. 2,59,065.50 under erstwhile Rule 173 Q of the Central Excise Rules 1944, with an option to redeem the varnished paper on payment of a redemption fine of Rs. 1,00,000. However, the Tribunal found that the Commissioner did not conclusively determine the excisable nature of the goods, stating, 'the unaccounted finished goods are subject to multifarious uses and are leviable to Central Excise duty.' The Tribunal held that confiscation cannot be based on doubts and set aside the order for confiscation and redemption fine.2. Seizure of Un-Printed Laminated Sheets and Other Items:The Commissioner ordered the vacation of the seizure of un-printed laminated sheets, a three-wheeler, and carton boxes. The Tribunal upheld this decision as no further evidence was presented to challenge the vacation of these seizures.3. Confirmation of Central Excise Duty on Laminated Sheets:The Commissioner confirmed the central excise duty on laminated sheets amounting to Rs. 36,081 under Sec. 11A of the Central Excise Act-1944. However, the Tribunal noted that the demand was confirmed based on 'conjectures and presumptions' without substantial evidence. The Tribunal found that the invoices in question involved more activities than just lamination, such as 'processing,' 'plates,' and 'printing,' and thus should be considered as products of the printing industry. Consequently, the demand was set aside.4. Imposition of Interest on Confirmed Duty:The Commissioner ordered interest at the appropriate rate on the confirmed duty amount under erstwhile Sec 11AB of the Central Excise Act 1944. Since the Tribunal set aside the duty demand, the order for interest was also set aside.5. Imposition of Penalties on the Party and Individuals:Penalties of Rs. 36,081 on the party, Rs. 1,00,000 on Sh. Jatinder Shroff, and Rs. 50,000 on Sh. Mukul Mandiratta were imposed under erstwhile Rule 209A of the Central Excise Rules 1944. The Tribunal found no specific findings or evidence to justify these penalties, stating, 'No finding has been recorded for imposition of the penalty upon the Appellant No.2 & Appellant No.3.' The penalties were set aside as the primary demand and confiscation orders were annulled.6. Procedural and Evidentiary Issues in the Adjudication Process:The Tribunal highlighted procedural lapses, such as the lack of detailed examination of invoices and the absence of clear evidence for the nature of work done or raw materials used. The Tribunal emphasized that 'confiscation should have been done on the basis of the categorical findings with regards to the excisable nature of the goods,' which was lacking. The Tribunal also criticized the adjudicating authority for making decisions based on 'surmises and presumptions.'Conclusion:The appeals were allowed, and the impugned orders for duty demand, confiscation, and penalties were set aside due to lack of substantial evidence and procedural lapses.