By TIOL News Service

NEW DELHI, JAN 05, 2017: THE appellants are engaged in the manufacture of pan masala liable to Central Excise duty. Officers of Central Excise Intelligence visited the premises of the appellant in February 2011 and conducted certain verifications. It was found that the appellants had 29,000 kgs. of Betel Nut, 83 kg. of perfumery compound and 858.17 kg. of packing material without proper account, in the premises. The appeal is against the confiscation of the seized Betel Nut (supari) valued at Rs. 20,30,000/-. The Original Authority ordered the confiscation of this Betel Nut on the ground that Betel Nut is an excisable commodity under Tariff Heading 21069030 as a product of Betel Nut classifiable under Chapter 21 meant for miscellaneous edible preparation. He held that non-accountal of excisable product attract the provision of Rule 25 (1) of Central Excise Rules, 2002 and accordingly ordered the confiscation of the same with an option to redeem the confiscated goods on fine of Rs. 4,00,000/-. On appeal, the said order was confirmed by the Commissioner (Appeals).

After hearing both sides, the Tribunal held:

+ A perusal of Rule 25 would indicate that the whole Rule is applicable only with reference to excisable goods. In the present case, the seizure and confiscation is for Betel Nut. These are raw material for further manufacture by the appellant and not a supari product. We find the lower Authorities fell in error in applying the provisions of Rule 25 in respect of Betel Nut which is not an excisable goods in the form in which it was seized. Further, the justification recorded in the impugned order is to the effect that the appellants failed to submit statements regarding details of Betel Nut and thereby violated the provisions of Rule 12 (2) of Central Excise Rules, 2002. As such, the confiscation was upheld. We find that even if it is a violation of the Notification No. 3/2007-CE (NT) mandating the submission of statement of raw material including Betel Nut, failure to do so can at best result in imposition of penalty. The confiscation of goods ordered in terms of Rule 25 of Central Excise Rules, 2002 is not justified as the said Rule applies to only excisable goods. In the present case, the raw Betel Nut lying in with the appellants are not excisable goods and, as such, the confiscation of the same is not legally sustainable.

(See 2017-TIOL-41-CESTAT-DEL)