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TMI Blog2009 (12) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... 504 and found that manufacturing activity was also going on in the said plot and steel coils were found in the form of plates, sheets etc. (semi-finished goods). These goods were seized on 6-9-06. The appellants applied for provisional release and executed a bank guarantee of Rs. 9.19 lakhs and a bond and thereafter cleared the finished goods under invoice Nos. 4, 5 & 6 dated 20-10-06, which were manufactured out of the raw material which has been seized. According to the records, the division office of Central Excise is stated to have written a letter communicating the order of Commissioner dated 20-10-06 ordering provisional release on 9-1-07. Thereafter, a show cause notice was issued to the appellant, which has culminated into the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powers the Departmental officers to confiscate the semi-finished goods. Therefore, the confiscation is also required to be set aside. Further, he also submits that the appellants had no intention to deposit or disregard any of the legal provisions. They had a time-bound order to supply reaction vessels to M/s. Gujarat Alkalies and would have suffered a heavy penalty if they had not cleared the finished goods on 20-10-06. Therefore, as soon as they came to know that the Commissioner had ordered provisional release and issued a letter on 26-10-06, they had cleared the finished product on the same day. He agrees that they should have ensured that a letter from the Commissioner was received by them. Further, he also submits that the divisional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so submits that the appropriation of amount made from the duty paid on the finished goods is not towards finished goods, but being the Cenvat credit amount attributable to raw materials used and the raw materials which have been seized in the form of semi-finished goods by the Department. Therefore, he submits that Rule 25 has been correctly invoked and correctly applied. Further, he also submits that the confiscation of seized goods is perfectly in order in view of the fact that the appellant cleared the finished goods on 20-10-06 which would show that the appellants continued the manufacturing operation subsequent to seizure and handing over of the seized goods under super drama contrary to the condition under which the goods were handed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to reverse the Cenvat credit and in such a case also, the result would have been the same since it is not the case of the department that the raw materials have not been used in manufacture of finished goods but have been diverted or sold or misused. In view of the fact that there cannot be a duty demand on the raw materials in this case in absence of any evidence to show that the same have been diverted and not used in manufacture of finished goods, penalty under Section 11AC equal to the duty amount also cannot be sustained. Therefore, the duty demand on the raw materials as well as penalty are set aside. In fact, even in cases of proven offence, benefit of Cenvat credit is normally extended. 5. As regards confiscation, no doubt t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... again learned advocate submitted that there were mitigating factors for this action. They were to make supplies to M/s. Gujarat Alkalies in terms of time bound order which would have resulted in heavy penalty if they would not have fulfilled the order by that date. So, the appellant had chosen between violating the provisions of Central Excise law or invite heavy penalty from the customer. Under these circumstances and in view of the fact that it is not the department's case that there was any misuse or diversion of raw materials, the omission becomes only procedural. However, the fact remains that the appellants have contravened the provisions of Rule 25(c) of Central Excise Rules, 2002 when they moved the raw materials to Plot No. 1506 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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