2011 (10) TMI 541 - AT - Central Excise

Duty demand - Raw materials imported free of duty - Confiscation of goods - Imposition of redemption of fine - Held that - when the goods are released provisionally on execution of bond confiscation can be affected even if the goods are not available. The natural conclusion is that the goods should have been released on bond which would mean that the goods have been taken possession of by way of seizure and subsequently released on execution of bond. Admittedly that is not the situation in this case also. In this case respondents themselves have diverted the goods and after diversion proceedings have been initiated. There is no seizure of the diverted goods and release of the same provisionally on execution of bond. Further the confiscation always presumes availability of goods and presumption normally is that goods have been seized and thereafter the proceedings would culminate into confiscation or release. Confiscation would mean that seized goods become the property of the Government and the party to whom it is ordered to be released on payment of fine will have to pay fine and redeem the goods. When the goods have been diverted and not released on execution of bond with conditions the question of confiscation of the same does not arise since goods have already become someone else s property - Decided against Revenue.

Summary

Issues:
1. Duty diversion of imported raw materials for manufacturing goods for export.
2. Imposition of penalty on the appellant and Director.
3. Appeal against the redemption fine set-aside by the Commissioner (Appeals).

Analysis:

1. The case involved the diversion of imported raw materials valued at Rs. 6,81,237, which were supposed to be utilized for manufacturing goods for export. This led to the initiation of proceedings resulting in the confirmation of duty demand on the goods obtained duty-free. Additionally, penalties were imposed on the appellant and the Director.

2. The Commissioner (Appeals) set aside the redemption fine of Rs. 5 lakhs imposed on the respondent company. The Revenue appealed against this decision.

3. The Revenue relied on the decision of the Hon'ble Supreme Court in Weston Components Limited v. Commissioner of Customs, New Delhi, which stated that goods released on bond can be confiscated even if physically unavailable. The Revenue argued that in the case of 100% EOUs, the B-17 Bond should be executed, making the Supreme Court's decision applicable. The Revenue also contended that the Tribunal's decision in Shiv Kripa Ispat Pvt. Limited v. CCE, Nasik, was not relevant as it pertained to a lack of bond or security.

4. The judge examined the submissions and disagreed with the Revenue's contentions. The judge noted that the goods in question were not released provisionally on bond, as required for confiscation as per the Supreme Court's decision. Since there was no seizure of the diverted goods and subsequent release on bond, confiscation was not justified. The judge also found the Tribunal's decision relevant, as the absence of a bond with security meant confiscation was not warranted. Confiscation implies seized goods becoming government property, which was not the case here due to the diversion of goods.

5. Ultimately, the judge rejected the Revenue's appeal, stating that without the goods being released on bond, confiscation was not applicable. The diversion of goods meant they were no longer available for confiscation, as they had become someone else's property. Therefore, the appeal was dismissed based on the lack of merit in the Revenue's arguments.

This detailed analysis of the judgment highlights the key issues, arguments presented, and the judge's reasoning leading to the decision to reject the Revenue's appeal.