Clandestine removal and duty demand sustained, but confiscation was set aside for lack of intent to evade duty.

Contemporaneous admissions, seized production records and corroborative documents were treated as sufficient to sustain duty demands on shortages of finished goods and inputs, and on clandestine clearance of rigid PVC pipes. The explanation of inter-se adjustment between units was rejected because the comparative charts did not cover all varieties, and retraction did not displace the evidentiary value of the statements. Confiscation of inputs, finished goods, and land, plant, building and machinery was set aside because mere non-accountal, without material showing intent to evade duty, was insufficient. Penalties were maintained in principle but reduced on the facts.

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Issues: (i) Whether duty demands on finished goods and inputs found short, and on clandestine clearance of rigid PVC pipes, were sustainable; (ii) Whether confiscation of inputs, finished goods, and land, plant, building and machinery was justified; (iii) Whether the penalties imposed on the manufacturers and the General Manager required reduction.

Issue (i): Whether duty demands on finished goods and inputs found short, and on clandestine clearance of rigid PVC pipes, were sustainable.

Analysis: The shortage of finished goods and inputs stood admitted, and the explanation based on inter-se adjustment between the two units was rejected because the comparative charts did not cover all varieties involved. The finding of clandestine manufacture and removal was supported by the General Manager's admissions, contemporaneous booklets showing date-wise and shift-wise production, and production reports seized from the factory. The plea that the retraction destroyed the evidentiary value of the statements was not accepted, and the contention that the demand should be reduced for alleged overlap in records was also rejected.

Conclusion: The duty demands on shortages of finished goods and inputs, and on clandestine clearance of rigid PVC pipes, were upheld against the assessee.

Issue (ii): Whether confiscation of inputs, finished goods, and land, plant, building and machinery was justified.

Analysis: Confiscation for mere non-accountal of goods was found unsustainable in the absence of material showing the requisite intent to evade duty. Applying the principle that confiscation is not attracted for mere non-accountal in the circumstances considered, the order of confiscation could not be sustained.

Conclusion: The confiscation of goods and of land, plant, building and machinery was set aside in favour of the assessee.

Issue (iii): Whether the penalties imposed on the manufacturers and the General Manager required reduction.

Analysis: Since the duty demands were sustained, penalty was held to be maintainable. However, taking the totality of the facts and circumstances into account, the quantum of penalty was moderated.

Conclusion: The penalties were upheld in principle but reduced to Rs. 3,00,000 for M/s. Plastotex (Bombay) Pvt. Ltd., Rs. 4,00,000 for M/s. Omniplast (Bombay) Pvt. Ltd., and Rs. 10,000 in each case for the General Manager.

Final Conclusion: The appeals succeeded only to the limited extent of setting aside confiscation and reducing penalties, while the duty demands on shortages and clandestine clearances were sustained.

Ratio Decidendi: Contemporaneous admissions, seized production records, and corroborative documentary evidence can sustain clandestine removal and duty demands, but confiscation for mere non-accountal is not justified without evidence of intent to evade duty.

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