Under Rule 25 of the Central Excise Rules, 2002, the Raw material is not liable to be confiscated: CESTAT, Delhi

In a recent case, the Delhi bench of Customs, Excises and Service Taxes Appellate Tribunal held that the raw material cannot be confiscated under Rule 25 of the Central Excise Rules, 2002. According to the facts of the case, the appellant is a company engaged in the manufacture of Sponge Iron, MS Ingots and Silico Manganese. The team of preventive officers of central excise, customs and service tax searched the premises twice in November 2015. These searches were done on the information of the procurement of unaccounted raw materials, clandestine manufacture of excisable goods without accounting the same in their daily stock account and removing the same without payment of central excise duty. The documents were recovered during the search and the investigating team got stock of finished goods and raw material during the physical verification.

After the verification of the document and reports, it was determined that there are excess and unaccounted stock of raw materials in the factory premises. Due to this, the appellants were given a show cause notice which proposed the seizure of the raw materials to be confiscated with the imposition of penalty. On this, the appellant has urged that the accounts for the excess raw material was yet to be recorded and there was no such allegation that the records were not maintained by the appellant for a long time. It was also submitted that there was no evidence which reiterated that the impugned allegations of clandestine removal as the excess goods present on the factory premises were not for the production of more than one day. Therefore, the non-entry of that day’s production record cannot be a reason to impose penalty.

Considering all the arguments and submissions the court held that it is apparent from the records that the appellant requested for the opportunity of cross-examining the witnesses the said opportunity has been denied cross-examination is the basic rule of ensuring fair trial the denial thereof in the case which lacks any cogent evidence adversely affects the Department. Department has not brought any such evidence which may prove their allegations. In the absence thereof, however, in view of the acknowledgment that the notice shortage is just of one-day production even if recording as required under Rule 10 is missing, but the same does not warrant the application of Rule 25 (1) (b) of Central Excise Rules, 2002.