TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 2141
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....nly till 28/2/2011. Certain loose papers and Kacchi Parchi files (scrap paper) were also recovered. On the basis of these, proceedings were initiated against the appellant. A show cause notice proposing for confiscation of goods seized and for imposition of penalties was issued. The show cause notice culminated in the order-in-original dated 31/5/2011 which ordered confiscation of the goods with option to redeem the same on payment of redemption fine of Rs. 1 lakh in the case of finished goods and imposed redemption fine of Rs. 10,000/- in the case of raw materials. A further penalty of Rs. 2,50,000/- was imposed on the firm M/s. Sargodha Enterprises under Rule 25 of Central Excise Rules, 2002 besides separate penalty of Rs. One lakh imposed on Shri Deepak Maini Partner of M/s. Sargodha Enterprise under the Central Excise Rules. The appellants filed appeal before the Commissioner (Appeals) who modified the order by setting aside the confiscation and redemption fine in regard to raw materials. The confiscation of finished products and imposition of redemption fine of One lakh in lieu of confiscation of t he same, and the penalty imposed upon the appellants were upheld. Aggrieved the....
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....er confiscation was done to prove removal of goods clandestinely with intention to evade payment of duty. Though the statement of Shri Deepak Maini, Partner is recorded on 26.08.2011, it is not made part of RUD. Therefore, no reliance can be placed on such statement. The statement of Shri Deepak Maini and Shri Neeraj Khattar recorded on 10.03.2011 does not state anything about clandestine removal of goods. Therefore, allegation that appellant had intention for removal of excess stock clandestinely is without basis. It was also argued that in any case, the redemption fine and penalty imposed are not only unsustainable but also very high. 4. Against this, the arguments on behalf of the respondents is summarized as under: i) The goods confiscated were actually finished goods. The contention of the appellant that the goods confiscated were not finished and that they needed further painting and buffing is not supported by any evidence. The statement of Shri Deepak Maini, partner of M/s. Sargodha Enterprises which was taken on the spot did not mention any such process needed and this would prove that goods are finished goods. ii) The goods were confiscated on reasonable belief tha....
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.... goods. In their reply to the show cause notice, the appellants have stated that the goods confiscated as finished goods were not actually finished goods but had to undergo further process of painting and buffing. That the goods not being finished goods, these were not accounted in RG-I Register. Though in the reply, the appellants are seen to have put forward such a contention, this contention is not supported by the statements given by Shri Deepak Maini and Shri Neeraj Khattar on the date of inspection. In their statements recorded on 10/3/2011, they have not stated that goods are unfinished goods and that such goods require further process of painting and buffing before sent to buyers. The process of manufacture explained by Shri Deepak Maini is that raw materials are put for heating and after heating they start moulding and then these are sent to print shop. After printing process, these are dispatched to parties. The process of manufacture as explained in their statements does not contain the process of painting and buffing. It is also to be mentioned that the submission made by the counsel that the statement of Shri Deepak Maini recorded on 26/8/2011 is not made part of RUD i....
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....ding a reasonable belief, is a question that can be analyzed. The fact of recovery of unaccounted finished goods and raw material and the fact that the RG-1 Register was updated only till 28/2/2011 together with the fact of recovery of loose papers containing accounts of clearance of finished goods, purchase of raw materials, together with the statements given are sufficient materials to arrive at a prima facie conclusion or reasonable belief that the goods are liable for confiscation. It is also contented that the respondents have not recorded that there is reasonable belief to confiscate the goods. This argument does not appear to be convincing to me. As already discussed, there was enough material to affirm a prima facie case for confiscation. Shri Deepak Maini in his statement has stated that the officers on the reasonable belief that the excisable goods have been manufactured and stored with an intention to remove the same clandestinely and without payment of duty seized the finished goods as mentioned in Annexure-B. The statement given by Shri Neeraj Khattar is also in similar lines admitting the discovery of unaccounted finished goods and raw material. On such score, the con....
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....ll not attract the Provisions of Rule 25 of Central Excise Rules, 2002. I do agree that the Tribunal in the said case had held that in the absence of the element of mens rea, confiscation and imposition of penalty is not sustainable. The contention put forward by appellant is that as there is no evidence to establish that the appellant cleared the goods clandestinely, there is no intention on the part of the appellant to evade the payment of the duty. Mens rea or intention is something that has to be inferred from the facts, circumstances and evidence placed on records. The instant case is not a situation where there is mere non-accountal of finished goods. If the finished goods were not accounted in the register, the appellant should be able to give a plausible explanation for such non-accounting. In Pepsi Foods Vs. CCE-Chandigarh, 2002(139) ELT 658 (Tri-Del), the non-accountal was sufficiently explained by the assessee. The Tribunal therein observed that Rule 173Q cannot take in an accounting failure simplicitor and held in favour of the assessee. Failure to account goods or raw material may be due to different reasons. There may be instances where the person incharge of accounts....