2005 (2) TMI 720 - AT - Central Excise

Tribunal overturns demand & penalty for misrepresentation in TV manufacturing due to lack of evidence

The Tribunal set aside the adjudication order confirming the demand and penalty imposed on the appellant for alleged misrepresentation of production and ... Demand - Clandestine removal Issues:1. Appeal against adjudication order confirming demand and imposing penalty for alleged misrepresentation of production and consumption of Colour Picture Tubes in the manufacture of TVs.Analysis:The appellant filed an appeal against the adjudication order passed by the Commissioner of Central Excise, confirming the demand and penalty. The issue revolved around the appellant allegedly misrepresenting the production and consumption of Colour Picture Tubes in the manufacture of TVs. The demand was based on the appellant showing more production of picture tubes than actually consumed in TV manufacturing, leading to duty evasion.The appellant contended that the demand was based on their balance sheet figures, showing the number of picture tubes procured and TVs manufactured in different years. They argued that some tubes were cleared as spare parts, for Research & Development, or were rejected during production. The appellant maintained separate records of tube rejections, which were not accepted by the Commissioner (Appeals) as statutory documents. The appellant claimed that the rejected tubes were not used in TV manufacturing, as TVs require various other components besides tubes.On the other hand, the revenue argued that the consumption of picture tubes as shown in the balance sheet should be considered as used in TV manufacturing. They accepted the clearance of tubes for Research & Development but disputed the claim of tube rejections without evidence. The dispute centered on whether the rejected tubes were indeed used in manufacturing duty-free TVs, as alleged by the revenue.The Tribunal found that the core issue was the status of the rejected picture tubes - whether they were actually used in TV production or not. The appellant's maintenance of a rejection register, detailing the rejected tubes, was crucial. The lack of evidence from the revenue to prove the use of rejected tubes in TV manufacturing, coupled with the presence of other essential components in TV production, led the Tribunal to conclude that the demand was not sustainable. Consequently, the impugned order was set aside, and the appeal was allowed.