2001 (2) TMI 568 - AT - Central Excise

Appeal allowed in goods confiscation case due to unfinished state, penalties set aside

The appeal was allowed in the case concerning the confiscation of goods and imposition of penalties on valve manufacturing appellants. The court found ... Accounts and records - Manufacture - Confiscation Issues:- Appeal against Order-in-Appeal passed by Commissioner (Appeals) regarding confiscation of goods and imposition of penalty.- Whether the goods in question reached the finished stage or were in a semi-finished condition, determining liability for confiscation under Rule 173Q of the Rules.Analysis:The appellants, engaged in valve manufacturing, were visited by revenue officers who found an excess of 501 pcs. of valves in their stock. A show cause notice was issued for confiscation of goods and penalty imposition. The adjudicating authority confiscated the goods with an option for redemption on payment of a fine and imposed a penalty. The revenue filed an appeal, which was rejected. The appellants argued that the valves were not in a finished stage and had yet to undergo various processes, relying on case law to support their claim. The Revenue contended that the goods were finished and liable for confiscation. The key issue revolved around the stage of the goods in question - finished or semi-finished.The partner of the appellant firm explained that the valves were yet to be tested, dressed, and painted, supported by the classification list filed by the appellants and responses to the show cause notice. The appellants maintained that the goods had not reached the finished stage as they were still to be fitted with components and undergo testing. The absence of findings by the authorities on these crucial points was noted. Citing the decision of the Andhra Pradesh High Court and a Tribunal case, it was established that goods not at the stage of removal are not liable for confiscation under Rule 173Q, especially when there is no intent to evade duty. As the authorities did not address the appellants' contention and given the circumstances, the goods were deemed not liable for confiscation, leading to the appeal's allowance and the impugned order's setting aside.In conclusion, the judgment focused on the crucial issue of whether the valves in question were in a finished or semi-finished state, determining their liability for confiscation. The appellants' consistent plea that the goods had not reached the finished stage, supported by legal precedents, was upheld due to the lack of contradictory findings by the authorities. This resulted in the appeal being allowed, setting aside the previous order.