Tribunal Overturns Confiscation and Penalty; Packing and Filling Oil Ruled as Manufacturing Under Excise Law.

The Tribunal set aside the impugned order of confiscation and penalty under Rule 25 of the Central Excise Rules, 2002, finding the Appellant's activity of packing and filling lubricating oil constituted manufacture under the Central Excise Act, 1944. The goods, marked with IOCL ownership, were within the factory premises. The Tribunal ruled the proceedings were based on assumptions, allowing the Appeal and granting consequential relief as per law. Judgment was pronounced on 07.06.2024.

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

Summary:
The case involved the confiscation of goods valued at Rs.4,42,108/- under Rule 25 of Central Excise Rules, 2002, and imposition of penalty on the Appellant. The Appellants were engaged in packing and filling lubricating oil in pouches from bulk volumes for IOCL. A physical verification revealed unrecorded consignments in pouches, leading to a Show Cause Notice for confiscation and penalty. The Adjudicating Authority confiscated the goods and imposed a redemption fine and penalty. On appeal, the Commissioner(Appeals) upheld the decision, prompting the Appellant to approach the Tribunal.

The Appellant argued that their activity of packing and re-filling pouches amounts to manufacture, as they receive bulk lubricants from IOCL for conversion. They contended that the goods were within their premises and not intended for removal without payment of Excise Duty. The Department justified the confiscation based on unrecorded stocks found during physical verification.

After considering the arguments, the Tribunal observed that the Appellant's activity constituted manufacture under the Central Excise Act 1944. The Appellant, acting on behalf of IOCL, was responsible for stock reconciliation post-conversion. The goods in question were within the factory premises and bore IOCL markings, indicating ownership. Referring to a relevant case law, the Tribunal held that the proceedings were based on assumptions and presumptions, setting aside the impugned order.

Consequently, the Tribunal deemed the impugned order unsustainable and allowed the Appeal with any consequential relief as per law. The judgment was pronounced on 07.06.2024.

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