Full Judgment
2. It was alleged that the said stock of P.O.Y. was procured from indigenous sources by the appellants in their 100% EOU, which was not accounted for in their Bond register. The bond register indicated that, the said stock was issued for utilisation in the plant for further manufacture, whereas the stock was actually present in the factory's store room. It was contended by the appellants that, though the entry was made in the stores register showing issue for internal consumption, the yam was not actually shifted from the store room to the production site. In the adjudication order, the Commissioner also notes that the quantity under seizure, ta(sic)llies with the various D-3 declarations filed, at the time of the inward receipt of the said goods in the factory. Despite these findings, the Commissioner, by applying the provisions of the Rule 25 of the Central Excise Rules 2002, subjected the seized goods to confiscation and penal action.
4. The short question in this case (even if one were to assume that the seized material is in excess of the stock of raw material declared in the records of the user factory) is as to whether the confiscation under Rule 25 of the Central Excise Rules 2002 can be justified? (1) subject to the provisions of Section 11AC of the Act, if any producer, manufacturer, registered person of a warehouse or a registered dealer, - (a) removes any excisable goods in contravention of any of the provisions of these rules or the notifications issued under these rules; or (b) does not account for any excisable goods produced or manufactured or stored by him; or (c) engages in the manufacture, production or storage of any excisable goods without having applied for the registration certificate required under Section 6 of the Act; or (d) contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty, - then, all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse or a registered dealer, as the case may be, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention of the nature referred to in Clause (a) or Clause (b) or Clause (c) or Clause (d) has been committed, or rupees ten thousand, whichever is greater.
It is obvious that (sic) the rule has been applied to appellants in the capacity of being a manufacturer. On going through the above text, it is obvious that only Clause (b) of Sub-rule (1) of Rule 25 relating to non-accountal of excisable goods can have application to the facts of the instant case. Commissioner's order is delightfully vague as to under which clause of Rule 25(1) the confiscation has been confirmed.
5. It must be understood that the requirement of accountal of "excisable goods" applies to the manufacturer of the excisable goods.
In this case the appellants are not the manufacturer of the P.O.Y. They are the users of the P.O.Y. Therefore even if there is a non-accountal of P.O.Y. as alleged, even then, Rule 25(1) can not be applied for confiscating such non-accounted P.O.Y. Notwithstanding this legal position, the Commissioner in his findings has also concluded that, there is a proper accountal of the said quantity. Therefore the order which on one hand says that there is a proper accountal and at the same time orders confiscation for the reason of non-accountal, can not be sustained.
6. Accordingly, the appeal succeeds and the same is allowed with consequential reliefs in accordance with the law, and the impugned order is set aside.