Commr. of C. Ex. Vs. Ramco Confectionery (P) Ltd. - Court Judgment

Excerpt:
1. in this appeal which has been filed by the revenue against the impugned order-in-appeal, the issue centres around the question as to whether the confiscation of the unaccounted goods lying in the factory premises of the respondents could be ordered or not after having been released provisionally to them during the adjudication proceedings. the adjudicating authority only imposed a penalty of rs. 5,000/- under rule 173q(1) of the rules for non-accountal of the goods and refused to order the confiscation of those goods on the ground that those were not available for having been released to the respondents provisionally.that order has been upheld by the commissioner (appeals). but in my view, the ground on which the confiscation of the seized unaccounted goods had been refused by the authorities below is not legally tenable in view of the apex court's judgment in the case of weston components ltd. v. cce, new delhi reported in 2000 (115) e.l.t. 278 wherein it has been ruled that even in the event non-availability of seized goods due to provisional release of the same to the party from whose possession the seizure was made, the confiscation at the time of adjudication could be ordered.2. the learned consultant on behalf of the respondents has referred to the ratio of law laid down in the case of friends wire industries v.cce, chandigarh, 2003 (156) e.l.t. 218 (t) to contend that confiscation of the goods could not be ordered as unaccounted goods were not finished goods. but his contention cannot be accepted. the unaccounted goods were not found to be in semi finished condition in the factory premises of the respondents, rather those were found to be fully finished goods and that is why a penalty under rule 173q(1)(b) was imposed by the adjudicating authority. even the commissioner (appeals) has affirmed that part of the order of the adjudicating authority. the respondents had not challenged that part of the order by way of an appeal before the tribunal. in friends wire industries (supra) the confiscation of the goods was not sustained as the goods had not reached at finishing stage and only penalty under rule 226 of the rules was ordered. but such is not the position in this case. similarly, the law laid down in flex industries ltd. v. cce, noida, 2003 (151) e.l.t.198 (t) holding that non accountal of goods by the assessee in rg-1 in the absence of intention to evade payment of duty could not warrant confiscation of the goods. this judgment was passed by relying upon the judgment in bhillai conductors (p) ltd. v. cce, 2000 (125) e.l.t. 781.but the ratio of law laid down, in that case cannot be given preference over the (bombay high court judgment in kirloskar brothers, 1988 (34) e.l.t. 30 (bom.) = 2002 (83) ecc 497 wherein it has been ruled that even in the absence of mens rea for non-accountal of goods by the manufacturer, the provisions of rule 173q(1)(b) can be invoked and confiscation of the goods can be ordered.3. since the ratio of law laid down by the apex court and the bombay high court in the above referred cases has been overlooked by the authorities below, the impugned order to the extent to which it has been challenged in this appeal cannot be sustained and is set aside.the matter is sent to the adjudicating authority to pass appropriate order regarding confiscation of the goods and payment of redemption fine by the respondents for the release of the same to them. the impugned order regarding imposition of penalty of rs. 5,000/- on the respondents under the rule 173q stands unaltered for having become final for want of any challenge to the same by the respondents. the appeal of the revenue accordingly stands allowed. the matter will be decided by the adjudicating authorities after hearing both the sides.

Judgment:
1. In this appeal which has been filed by the Revenue against the impugned Order-in-Appeal, the issue centres around the question as to whether the confiscation of the unaccounted goods lying in the factory premises of the respondents could be ordered or not after having been released provisionally to them during the adjudication proceedings. The adjudicating authority only imposed a penalty of Rs. 5,000/- under Rule 173Q(1) of the Rules for non-accountal of the goods and refused to order the confiscation of those goods on the ground that those were not available for having been released to the respondents provisionally.

That order has been upheld by the Commissioner (Appeals). But in my view, the ground on which the confiscation of the seized unaccounted goods had been refused by the authorities below is not legally tenable in view of the Apex Court's judgment in the case of Weston Components Ltd. v. CCE, New Delhi reported in 2000 (115) E.L.T. 278 wherein it has been ruled that even in the event non-availability of seized goods due to provisional release of the same to the party from whose possession the seizure was made, the confiscation at the time of adjudication could be ordered.

2. The learned Consultant on behalf of the respondents has referred to the ratio of law laid down in the case of Friends Wire Industries v.CCE, Chandigarh, 2003 (156) E.L.T. 218 (T) to contend that confiscation of the goods could not be ordered as unaccounted goods were not finished goods. But his contention cannot be accepted. The unaccounted goods were not found to be in semi finished condition in the factory premises of the respondents, rather those were found to be fully finished goods and that is why a penalty under Rule 173Q(1)(b) was imposed by the adjudicating authority. Even the Commissioner (Appeals) has affirmed that part of the order of the adjudicating authority. The respondents had not challenged that part of the order by way of an appeal before the Tribunal. In Friends Wire Industries (supra) the confiscation of the goods was not sustained as the goods had not reached at finishing stage and only penalty under Rule 226 of the Rules was ordered. But such is not the position in this case. Similarly, the law laid down in Flex Industries Ltd. v. CCE, Noida, 2003 (151) E.L.T.198 (T) holding that non accountal of goods by the assessee in RG-1 in the absence of intention to evade payment of duty could not warrant confiscation of the goods. This judgment was passed by relying upon the judgment in Bhillai Conductors (P) Ltd. v. CCE, 2000 (125) E.L.T. 781.

But the ratio of law laid down, in that case cannot be given preference over the (Bombay High Court judgment in Kirloskar Brothers, 1988 (34) E.L.T. 30 (Bom.) = 2002 (83) ECC 497 wherein it has been ruled that even in the absence of mens rea for non-accountal of goods by the manufacturer, the provisions of Rule 173Q(1)(b) can be invoked and confiscation of the goods can be ordered.

3. Since the ratio of law laid down by the Apex Court and the Bombay High Court in the above referred cases has been overlooked by the authorities below, the impugned order to the extent to which it has been challenged in this appeal cannot be sustained and is set aside.

The matter is sent to the adjudicating authority to pass appropriate order regarding confiscation of the goods and payment of redemption fine by the respondents for the release of the same to them. The impugned order regarding imposition of penalty of Rs. 5,000/- on the respondents under the Rule 173Q stands unaltered for having become final for want of any challenge to the same by the respondents. The appeal of the Revenue accordingly stands allowed. The matter will be decided by the adjudicating authorities after hearing both the sides.