2003 (3) TMI 165 - AT - Central Excise

Summary

Issues:
Validity of the impugned order-in-appeal affirming confiscation of unaccounted goods and penalty imposition.

Analysis:
The appeal questioned the validity of the order-in-appeal affirming the confiscation of unaccounted goods and imposition of a penalty of Rs. 50,000 on the appellants. The facts revealed that PVC rigid films and rejected PVC films were found unaccounted for in the factory premises of the appellants during a visit by Central Excise officers. The goods were seized, and a show cause notice was issued. The appellants claimed that the unaccounted goods were awaiting quality tests and were marked as "H" for hold or "R" for reject after inspection, following a practice not permitted by Central Excise Rules. The authorities did not accept this plea, emphasizing that goods must be entered in the RG-1 register after manufacture, regardless of quality control processes. The argument that the goods were not fully manufactured and awaiting tests was rejected, as the goods could still be marketed without the tests. The Counsel's argument against confiscation due to the goods being in the factory was refuted, citing a Bombay High Court judgment allowing confiscation without mens rea. The Tribunal upheld the order-in-appeal, rejecting the appeal and denying a reduction in the redemption fine and penalty.

This judgment highlights the importance of complying with Central Excise Rules regarding the entry of manufactured goods in the RG-1 register, irrespective of quality control processes. It also clarifies that goods can be confiscated even if they are in the factory premises without mens rea. The decision reaffirms the authority's power to impose penalties under Rule 173Q and emphasizes the need for strict adherence to regulatory procedures to avoid confiscation and penalties.