Duty demands on alleged second sales and shed-construction inputs sustained for lack of records and inapplicable exemption.

Duty on goods cleared as "second sales" was sustained because the assessee failed to produce supporting purchase, payment, trading account, or purchase register records to substantiate duty-free clearance. The clearance was therefore not shown to be lawful or duty-paid. Exemption under Notification No. 67/95-C.E. was also rejected for MS channels used to construct a shed within the factory, because the notification applies to inputs or capital goods used in manufacture of final products, and a shed did not qualify. The confirmed demands and penalties were maintained, and the appeals failed.

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Issues: (i) Whether duty was correctly confirmed on goods cleared as "second sales" without supporting purchase and accounting records; (ii) Whether MS channels removed for construction of a shed within the factory were entitled to exemption under Notification No. 67/95-C.E.

Issue (i): Whether duty was correctly confirmed on goods cleared as "second sales" without supporting purchase and accounting records.

Analysis: The goods were cleared under delivery challans as "second sales", but the assessee did not produce material such as purchase documents, payment details, trading account or purchase register to substantiate the claim. The record showed that the authority had examined the facts and found deliberate non-payment of duty. On the materials before it, the clearance was not shown to be lawful or duty-paid.

Conclusion: The duty demand on the goods cleared as "second sales" was upheld against the assessee.

Issue (ii): Whether MS channels removed for construction of a shed within the factory were entitled to exemption under Notification No. 67/95-C.E.

Analysis: The exemption under Notification No. 67/95-C.E. was held to apply to inputs or capital goods used within the factory in the manufacture of final products. The channels were removed for construction of a shed, and a shed was not treated as capital goods or as goods used in manufacture of final products. Therefore, the notification benefit was unavailable for such removal.

Conclusion: The exemption claim under Notification No. 67/95-C.E. was rejected and the related duty demand was sustained against the assessee.

Final Conclusion: All the confirmed demands and penalties were sustained and the appeals failed in entirety.

Ratio Decidendi: Exemption notifications for captive use in manufacture cannot be extended to goods removed for construction of a shed within the factory, and duty demands are sustainable where the assessee fails to substantiate duty-free clearances with supporting records.

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