Order date – 16 September 2022

Facts – 

• The Appellant, M/s Sameer Industries, were searched by department at their premises.
•  During physical verification of goods, 44531.50 kgs. of ‘Lead Ingots’ valued at Rs.56,42,507/- was found un-accounted in the factory premises which, according to the department, were not entered in RG-1 register. The same was seized and thereafter handed over to proprietor of the appellant. 
• The first show cause notice dated 8.1.2014 was issued to the appellant for confiscation of the same. Those Lead Ingots were provisionally released to the appellant on 17.6.2014. 
• Based upon that search, investigation was carried out in which the department allegedly found evidences regarding unrecorded production and clandestine clearances of Lead Ingots. 
• Therefore another show cause notice dated 5.4.2018 was issued to the appellant demanding Central Excise duty of Rs. 81,10,648/- for the period from 9.6.2013 to 12.7.2013.
• Commissioner (Appeal) ordered the goods to be confiscated and directed to be released only after payment of redemption fine of Rs. 15 lakhs and penalty of Rs. 5 lakhs by the Appellant.
• Aggrieved, the appellant filed an appeal.

Issue – 

• Whether the goods seized by the department are liable for confiscation under the Act?

Order – 

• The Tribunal observed that on perusal of the 2nd show cause notice as well as the order of the learned Commissioner (Appeals) therein shows that the issue in both 1st and 2nd show cause notices is identical i.e. clandestine removal of goods and both the notices are based on the search conducted on 16.7.2013.
• The law is also well settled that the onus is on the department to prove that there has been unaccounted production of goods, which the department has failed to prove. 
• There may be some procedural lapses on the part of the appellant but that by itself would not be sufficient to confiscate the goods and would not justify the imposition of redemption fine and penalty. Such procedural lapses should not be given the colour of clandestine removal with intent of evading duty without any corroborative evidence. 
• Admittedly, a particular act is required to be done in a particular manner as provided under the statute but an inadvertent mistake to follow the procedural aspect cannot be adopted for arriving at the conclusions against the assessee. 
• Therefore, the confiscation or redemption fine or penalty are not sustainable and the impugned order is liable to be set aside. 
• Appeal allowed.