2018 (1) TMI 634 - AT - Central Excise

Tribunal rules on excise duty demand: penalties upheld or set aside based on evidence

M/s Shreyas India Pvt. Ltd., K.D. Agarwal Versus C.C.E. & S.T. Vapi

The tribunal found the demand for excise duty on inputs unsustainable due to lack of evidence of manufacturing by the appellant. While discrepancies in ... Clandestine removal - shortage of Calcium Carbonate which is an input - difference between daily production register (profit register) and daily stock register (RG-1 statutory register) - demand on the basis of consignment notice - penalty - redemption fine - Held that: - issue as regards the demand of the duty of inputs and finished goods allegedly manufactured and cleared clandestinely during excess August & September seems to be incorrect - In the absences of any evidence to indicate that the Calcium Carbonate is an input was manufactured by the appellant, the demand of excise duty is not sustainable. As regards the demand of excise duty of the goods allegedly clandestinely manufactured cleared during the period August and September 2009 I find that this allegation is based only on the mismatch of the production figures indicated in the profit register as against RG-1 register - the Revenue has not been able to conclusively prove that there was clandestine manufacture and clearances of the goods from the factory of the appellants - demand set aside. As regards, the evidences relied upon by the Ld. DR more specifically the statements of the Directors which is reproduced in the Show Cause Notice, I find that except for the statement of the Director which indicated that the goods were cleared clandestinely and cash basis further investigation had not taken place and there is no evidence on records to show that the cash was received from whom and where it was utilized - demand set aside. As regards the demand of ₹ 1,67,117/- on the goods allegedly removed clandestinely on the basis of two consignment notes, I find that the Revenue has been able to establish this demand - demand upheld. Confiscation - redemption fine - Held that: - I do not find that the said confiscation need not be upheld as there is nothing on records to indicate that the appellant had intention to remove the said goods clandestinely. In the absence of any such evidence, in my view, the confiscation of the goods needs to be set aside and I do so. Penalty - Held that: - the penalties imposed on the main appellant, the penalty of ₹ 1,67,117/- under Section 11AC needs to be upheld on the findings as recorded herein above while other penalties have to be set aside and I do so - as regards, the penalty imposed on Sh. K. D. Agarwal, the other appellant, there is nothing on records to show that he needs to penalized under Rule 26 of the Central Excise Rule 2002. Accordingly, the penalty imposed on Sh. Agarwal is set aside. Appeal allowed in part. Issues:1. Demand of excise duty on shortage of Calcium Carbonate, clandestinely manufactured goods, and goods removed clandestinely.2. Equivalent penalties on the company and the director.3. Confiscation of excess finished goods.4. Validity of demands and penalties imposed.Analysis:1. The issue involved demands of excise duty on shortage of Calcium Carbonate, clandestinely manufactured goods, and goods removed clandestinely. The appellant argued that the demand was unsustainable due to lack of evidence supporting clandestine activities. The Revenue relied on voluntary admissions by the company's director. The tribunal found the demand for excise duty on inputs unsustainable as there was no evidence of manufacturing by the appellant. Regarding clandestinely manufactured goods, the tribunal noted discrepancies in production figures but found insufficient evidence to prove clandestine activities, following precedents.2. The issue of equivalent penalties on the company and the director was considered. The tribunal upheld a penalty on the company but set aside other penalties due to lack of evidence. The penalty on the director was also set aside as there was no evidence to support it under the Central Excise Rule 2002.3. The confiscation of excess finished goods was examined. The tribunal found no evidence of intent to remove goods clandestinely, leading to the decision to set aside the confiscation.4. The validity of demands and penalties imposed was thoroughly analyzed. The tribunal dismissed demands for excise duty on inputs and clandestinely manufactured goods due to lack of conclusive evidence. However, a demand for goods removed clandestinely was upheld based on transporter statements. Penalties on the company and the director were selectively upheld or set aside based on the evidence presented. The tribunal's decision was pronounced on 09.01.2018, disposing of the appeals accordingly.