The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Delhi Bench ruled that the finished goods are not liable for confiscation in absence of any finding of attempted clandestine removal of excisable goods.
The appellant, M/s Maa Santoshi Tobacco Co. was indulging in evasion of Central Excise duty by resorting to clandestine manufacture and clearance of their finished goods, a search operation was conducted, wherein searches were conducted by the officers of DGCEI at the factory of the appellant and related premises.
The appellant was under the physical supervision of the Officers of the Central Excise Department. During the period of inspection Shri S. K. Lavasia, Superintendent, and Shri Nathu Lal Jain, Inspector was posted at the factory of the appellant. As per Rule 6 of the Central Excise Rules, in the case of cigarette, the Superintendent or Inspector of Central Excise is required to assess the duty payable before removal by the assessee. Further, Rule 11 stipulates that no excisable goods shall be removed from the factory or a warehouse except under an invoice signed by the owner of the factory or his authorized agent, and in case of cigarette, each such invoice shall be countersigned by the Inspector or Superintendent of Central Excise before the cigarettes are removed from the factory.
There is no allegation on the appellant of having removed any finished goods clandestinely without informing the Superintendent / Inspector. The arrangement of posting of Central Excise Officers round the clock was modified by the CBIC vide Circular dated May 1, 2017. The Board taking notice of a limited number of officers posted in the Range and the problem being faced in posting the Officers round the clock, and also by the cigarette manufacturing units, observed that in view of Rule 6 and 11 read together, the presence of Central Excise Officer is required for discharging the twin function of assessment of duty payable and countersigning the invoices before the cigarettes are removed from the factory.
The coram of Judicial Member Anil Choudhary ruled that any finished goods found not entered in the RG-I register on the date of inspection are not liable for confiscation in absence of any finding of attempted clandestine removal of the excisable goods. Further, the raw material which was found lying in the factory of the appellant was admittedly not manufactured by the appellant, and as such the same is not dutiable in the hands of the appellant. Thus, there is no requirement for confiscation of raw material in the facts and circumstances.
The CESTAT said that the order of confiscation and penalty can be made only in case of fraud, collusion, willful misstatement, suppression of facts, or any contravention of the provisions of the law with intent to evade duty. There is no such allegation in the facts of the present case save and except nonfinding or nonproduction of the statutory register RG-I and Form-IV for the reasons that the same were missing and could not be located.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
