2004 (3) TMI 483 - AT - Central Excise

Summary

Issues:
Violation of Central Excise Rules by M/s. Jaimini Industries and M/s. Varsha Engineers leading to confiscation of transformers, imposition of penalties, and appeal before the Tribunal.

Detailed Analysis:

1. Violation of Central Excise Rules:
- Central Excise Officers found 24 distribution transformers at M/s. Jaimini Industries, bearing the name of M/s. Varsha Engineers.
- M/s. Jaimini Industries admitted to not maintaining statutory Central Excise records for the transformers or filing any intimation with the Central Excise department.
- Show cause notice issued to both parties for confiscation under Rule 173Q(1) of the Central Excise Rules, 1944, and imposition of penalties.

2. Confiscation and Penalties Imposed:
- Assistant Collector confiscated the transformers and allowed redemption on payment of a fine of Rs. 50,000, along with Central Excise duty.
- Penalties of Rs. 10,000 each imposed on M/s. Jaimini Industries and M/s. Varsha Engineers, and Rs. 5,000 each on two individuals.

3. Appeal to Tribunal:
- The Commissioner scaled down fines and penalties but upheld the order, leading to an appeal before the Tribunal.

4. Tribunal's Findings:
- Tribunal noted that the transformers were manufactured by M/s. Varsha Engineers and found at M/s. Jaimini Industries, which does not manufacture transformers but paper coated wires.
- Lack of indication in the show cause notice regarding specific Central Excise Rules violations by M/s. Jaimini Industries.
- Department's approach deemed illegal, and no action sustainable against M/s. Varsha Engineers as goods were not received in their premises.
- No contravention seen on the part of M/s. Jaimini Industries as the restrictions on re-entry apply to goods manufactured by the entity, which was not the case here.

5. Legal Interpretation and Precedents:
- Tribunal highlighted that rules restricting re-entry of duty-paid goods apply to goods manufactured by the assessee or similar goods, not all materials used in manufacturing activities.
- Reference made to a Trade Notice clarifying the restrictions on re-entry of goods manufactured by the assessee or similar goods.

6. Decision and Relief:
- Tribunal allowed the appeals of both appellants, setting aside the lower authorities' orders.
- Consequential relief granted in accordance with the law, emphasizing the legality of the actions taken by the parties involved.

This detailed analysis of the judgment showcases the violations, penalties imposed, legal interpretations, and the Tribunal's decision regarding the confiscation of transformers and penalties on the parties involved.