2019 (1) TMI 1026 - AT - Central Excise

Tribunal rules in favor of appellant; duty demand upheld, penalties reduced.

United Chemicals & Industries, Dhiraj Sipani, Managing Partner Versus C.C.E. -Bangalore-I

United Chemicals & Industries, Dhiraj Sipani, Managing Partner Versus C.C.E. -Bangalore-I - TMI Issues Involved:1. Alleged shortage of 12,769 Kg of HDPE fabric.2. Non-accounting of goods received from job-workers.3. Alleged clandestine manufacture and clearance on Sundays.4. Seizure of 1.60 MT of finished goods stored in a sister concern’s premises without permission.Detailed Analysis:1. Alleged shortage of 12,769 Kg of HDPE fabric:The Revenue alleged a shortage of 12,769 Kg of HDPE fabric based on the weight written on the rolls. The appellants contended that the shortage was estimated and that the stock as per RG-1 had been cleared subsequently on payment of duty. The Tribunal found the appellant's contention acceptable, noting that the entire stock of 24,039 Kg had been accounted for in subsequent clearances. The Tribunal held that clandestine removal could not be alleged merely on the basis of a shortage found, citing the case of Daya Sugar, which emphasized the need for concrete evidence beyond mere estimations. Therefore, the allegation of a shortage was not substantiated.2. Non-accounting of goods received from job-workers:The Revenue demanded duty on 18,221.70 Kg of goods allegedly not accounted for after being received from job-workers. The appellants argued that part of this quantity was defective or captively consumed. The Tribunal found that the appellants failed to provide proof for the unaccounted quantity. Hence, the appellants were required to discharge duty on this difference.3. Alleged clandestine manufacture and clearance on Sundays:The Revenue alleged that production and clearance occurred on Sundays based on an unauthenticated handwritten notebook. The appellants argued that not all dates mentioned were Sundays and that the notebook was not authenticated or corroborated by any other evidence. The Tribunal found the Department's investigation incomplete and inconclusive, noting that the authenticity of the notebook was not established, and no further proof of clandestine removal was provided. Therefore, this allegation was not substantiated.4. Seizure of 1.60 MT of finished goods stored in a sister concern’s premises without permission:The appellants admitted to storing goods in a sister concern’s premises due to a lack of space but argued that this was a procedural infraction. The Tribunal found that while the goods were accounted for, the appellants failed to obtain the necessary permission. The Tribunal upheld the confiscation but reduced the redemption fine from Rs. 1,00,000 to Rs. 5,000, deeming the initial fine excessive.Penalty on Shri. Dhiraj Sipani:The Tribunal found that no statement from Shri. Dhiraj Sipani was recorded during the investigation. The penalty imposed on him was based on the statement of another individual, which was retracted. The Tribunal held that without direct evidence or a statement from Shri. Sipani, the penalty was not sustainable and set it aside.Conclusion:The Tribunal concluded that the Department failed to substantiate the allegations of clandestine removal with concrete evidence. The demand for duty on the unaccounted quantity of 18,221.70 Kg of processed goods was upheld, and the case was remanded to the original adjudicating authority for duty quantification. The redemption fine was reduced, and the penalty on Shri. Dhiraj Sipani was set aside. The appeal was partly allowed and remanded for further quantification of duty and penalties.