Confiscation of goods not proper when they are duty paid and properly accounted.

PJ/Case Law/2013-14/1611

Case:-M/s LAXMI IMPLEX VERSUS COMMISSIONER OF CENTRAL EXCISE, VAPI

Citation:-2013-TIOL-895-CESTAT-AHM

Brief Facts:-This appeal is directed against Order-in-Appeal No.SA/23/VAPI/2011, dt.10.03.2011.The brief facts of the case are that an offence case was booked by the DGCEI on 10.05.2002 against the appellants. From the scrutiny of the records seized from the appellant's factory and the various statements it was revealed that 6252.68 mtrs of processed MMF valued at Rs.4,68,951/- were manufactured and stored in their factory without accounting for in their books of accounts and the same were intended for being cleared clandestinely. Therefore the same were seized and handed over to the appellants for safe custody. Therefore, a show cause notice was issued and the same was adjudicated vide Order-in- Original No.45/OA/ADJ/2003 JC, dt.08.08.2003. Being aggrieved with the said OIO, the appellants filed an appeal before the Commissioner (Appeal). The Commissioner (Appeal) vide Order-in-Appeal No.RKS/137 to 139/Vapi/2004 dt.16.03.04 confirmed the confiscation, imposition of redemption fine and upheld the penalty on the appellants. Further the appellants filed an appeal before The Tribunal. Tribunal, vide Order No.A/439/C-IV/WZB/2007 SMB, dt.01.02.2006 remanded the matter back to original adjudication authority. As per the direction of the Tribunal, the adjudication authority decided the case afresh under OIO NO.29/JC/OA/VAPI/2008, dated 30.12.2008 and ordered for confiscation of seized goods 1813.340 kgs (6254.40 Mtrs.) valued at Rs.4,68,951/-. The adjudicating authority also gave an option to redeem the same on payment of redemption fine of Rs.1,50,000/- in lieu of Confiscation and imposed a penalty of Rs. 52,000/-. Aggrieved by the said order the appellants filed an appeal with the Commissioner(Appeals) who vide Order-in-Appeal No.RS/423/VAPI/2008 remanded the matter back to the original adjudicating authority with directions for re-verifying the measurement and weight from the physical stock of seized goods available with the appellants and to take into consideration all the submissions made by them and dispose the matter accordingly. The adjudicating authority vide OIO No.32/JC/OA/VAPI/2010-11, dated 08.12.2010 ordered for confiscation of the impugned goods and gave an option to redeem the said goods on payment of redemption fine of Rs.1,50,000/- and also imposed penalty of Rs.52000/- on the appellants. The present appeals arise out of the said Order.

Appellant Contentions:-The contention of the appellant is that the first appellate authority also did not accept the contentions raised by the appellant and the impugned order was upheld and the appeal was rejected. It was submitted that the case made out by the authorities is totally wrong and the issue involved in this case is only in support of seizure and confiscation of goods which has been done by DGCEI vide their letter dt.31.10.2002. It is his submission that the DGCEI vide Panchnama dt.08.10.2010 has correctly worked out the details of availability of the stock with the appellants, held as 6254.40 Mtrs weighing appprox.1751.200 kgs. This weight was confirmed based upon the packing slips, supratnama and Excise invoice figures. It is his submission that both the lower authorities have confiscated this quantity of the fabrics on the ground that these goods were non-Excise duty paid and liable for confiscation. It is his submission that the entire order is based on presumptions and assumptions and both the lower authorities have not considered the fact that duty liability on this much quantity was discharged by the appellant vide Invoice No.02/2002-2003, dt.01.05.2002, as per the direction of DGFT authorities. Making this submission, he produced the said invoice and also the entries made in PLA for debit of the duty liability. He would also submit that this quantity has been received by them from M/s Anant Syntex Ltd under invoice No.8 dt.19.04.2002. He would draw attention to the said invoice and also the documents annexed to that invoice. He would submit that the entries of such goods received by the appellant were made in proper records and since they were demanding their goods, they discharged the duty liability vide invoice No.02 dt.01.05.2002.

Respondent Contentions:-The ld. Additional Commissioner (A.R.) would reiterate the findings of the lower authorities.

Reasoning of Judgment:-We have considered the submission from both the parties and perused the record, we find that exactly this quantity was received by the appellant from M/s Anant Syntex Ltd vide invoice No.8, dt.19.04.2002. On perusal of the documents attached with it, we find that there is a ARE-1, Packing list and transport company's LRs indicating the transportation of said quantity of the processed MMF fabrics to the appellant's factory which was an EOU at that time. Further, it is found that the said goods were received in the appellant's EOU and declared to the jurisdictional authorities i.e. Inspector of Customs and Central Excise, as per the requirement of law. It is also seen that the said goods were recorded in the register maintained by the appellant during the period when they were functioning as EOU. It is also seen that the appellant had sought de-bonding of the EOU unit, which was permitted, subject to discharge of duty liability on the finished goods as well as the material lying in stock in the appellant's EOU. Based upon such directions, the appellant herein prepared an invoice No.02/2002-2003, dt.01.05.2002, wherein he has discharged duty liability of Rs.32,158/- by making debit entry in PLA at Entry No.05, dt.01.05.2002. The appellant's factory was visited by DGCEI officers on 10.05.2002 and they did not agree with the contentions that the said goods were duty paid on the ground that having paid the duty, the goods could not remain in the factory premises. In Tribunal’s considered view, this seems to be very irrational and illogical way of coming to conclusion that the goods are liable for confiscation. As has been narrated hereinabove, the entire movement of the MMF fabrics from M/s Anant Syntex Ltd to the hands of the appellant have been properly recorded and all the documentary evidences were available. The findings of the lower authorities as to the appellant has not cancelled and re-entered the said stock with proper intimation to the Department, cannot be the reason to hold that the goods were liable for confiscation as the confiscation of the goods can be made only if they are non-duty paid or duty liability has not been discharged. In Tribunal’s view, the entire documentary records, indicate the discharge of duty liability on such quantity of goods, Tribunal find that both the lower authorities have erred in coming to the conclusion that the quantity of 6254.40 Mtrs which is equivalent to approx. 1751.200 Kgs of fabrics are liable for confiscation. The findings in impugned orders are erroneous and is liable to be set aside.

In view of the foregoing and in the facts and circumstances of this case, it is found that that the impugned order is unsustainable and is liable to be set aside.

Decision:-Appeal is allowed.

Comment:-The crux of this case is that the confiscation of goods can be made only if they are non-duty paidor duty liability has not been discharged. When the goods are properly accounted for in the books and the duty liability has been duly discharged on them, there is no good reason for confiscation of such goods.

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PJ/Case Law/2013-14/1611

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