2016 (11) TMI 1100 - AT - Central Excise

Allegations of clandestine removal of goods unsubstantiated, duty demand and penalties overturned

The Tribunal found that the allegations of clandestine removal of goods by M/s Shivani Detergents Pvt. Ltd. were not substantiated by reliable evidence. ... Demand - clandestine removal of goods - confiscation - no case is made out against the Appellant M/s Shivani Detergent and consequently, the demand and penalty against them are not sustainable. I also find that the lower authorities have ordered confiscation of the goods valued at ₹ 1,23,000/-, which were found in excess and imposed redemption fine of ₹ 5,000/-. I find that no evidence is forthcoming from the records, which can show that there was any attempt made by the Appellant firm to clear the said goods clandestinely or that such excess goods were kept unaccounted, with a view to clear them clandestinely. Further, there is no acceptance by any person that the goods were kept unaccounted, with intention to clear the same without payment of duty. I, therefore, hold that the goods are not liable for confiscation. Since I have held that the demand of duty as well as the confiscation of goods are not sustainable, penalties against M/s Shivani Detergent, Director Shri Naresh Bagani and Shri Mahesh Karambelkar are also not sustainable. Appeal allowed - decided in favor of assessee. Issues Involved:1. Allegations of clandestine removal of goods by M/s Shivani Detergents Pvt. Ltd.2. Imposition of duty demand and penalties on M/s Shivani Detergents Pvt. Ltd. and its directors.3. Confiscation of goods found in excess at the appellant's factory.4. Validity of evidence and statements used to support the allegations.Issue-wise Detailed Analysis:1. Allegations of Clandestine Removal of Goods by M/s Shivani Detergents Pvt. Ltd.:The appellant unit was accused of clandestine removal of Sargam Brand Detergent powder and cake without payment of duty. The show cause notice alleged that these goods were transported to Maharashtra through M/s ARCO Transport and M/s ARCO MP Freight Carriers. The allegations were based on statements from the transporter and buyers, as well as the bank account records of Shri Mahesh Karambelkar, who was claimed to be an employee of M/s Shivani Detergents.2. Imposition of Duty Demand and Penalties on M/s Shivani Detergents Pvt. Ltd. and its Directors:The adjudicating authority confirmed the duty demand of Rs. 8,86,822/- with an equal amount of penalty on M/s Shivani Detergents and imposed penalties of Rs. 50,000 each on its director and Shri Mahesh Karambelkar. The Commissioner (Appeals) upheld the charges of clandestine removal but reduced the demand by granting the benefit of cum-duty value. The appellant contested that the demand was based solely on the transporter's statement and the bank account of Shri Mahesh Karambelkar, without any corroborative evidence linking these to the appellant firm.3. Confiscation of Goods Found in Excess at the Appellant's Factory:The adjudicating authority ordered the confiscation of goods valued at Rs. 1,23,000/- found in excess at the appellant's factory and imposed a redemption fine of Rs. 5,000/-. The appellant argued that there was no evidence of an intention to remove these goods clandestinely.4. Validity of Evidence and Statements Used to Support the Allegations:The appellant provided various pieces of evidence, including income tax returns, PF and ESI records, and affidavits, to prove that Shri Mahesh Karambelkar was not an employee of M/s Shivani Detergents but an independent trader. The Tribunal found that the lower authorities did not establish that Shri Karambelkar was an employee of the appellant firm. Additionally, there was no linkage between the amounts in Shri Karambelkar's bank account and the alleged clandestine clearances. The Tribunal also noted that no records showed how the goods were transported from the appellant's factory to M/s ARCO transport, and none of the buyers recognized Shri Karambelkar as representing M/s Shivani.Conclusion:The Tribunal concluded that the allegations of clandestine removal were not substantiated by reliable evidence. It held that the statements of the transporter and the bank account records of Shri Mahesh Karambelkar were insufficient to prove the appellant's involvement in clandestine activities. Consequently, the duty demand, penalties, and confiscation orders were deemed unsustainable. The Tribunal allowed the appeals filed by the appellants, providing consequential relief.Final Order:The impugned order dated 31.03.2006 was set aside, and all appeals filed by the appellants were allowed with consequential relief.