2008 (3) TMI 79 - AT - Central Excise

Penalties overturned in excise duty cases due to lack of evidence

The Tribunal set aside penalties imposed on a company and its director in seizure-related proceedings due to lack of evidence supporting allegations of ... Allegation of clandestine removal on ground that fabrics were removed without stentering – since appellant is under the compounded levy scheme, the actual production and clearances are not relevant for determining the quantum of excise duty payable – assessee get no benefit by showing lesser production in books of accounts under this scheme – moreover there is no evidence(test result) to prove that fabrics were removed without stentering - confiscation/penalty imposed are not sustainable Issues Involved:1. Seizure related proceedings2. Demand relating to past clearancesSeizure related proceedings:The case involved the seizure of consignments from a company and subsequent proceedings against the company and its director. Penalties were imposed on the company and the director by the original authority, which were upheld by the Commissioner (Appeals). However, the Commissioner later set aside the penalty on the company, and the Department did not appeal against this decision. The Tribunal noted that the allegation of clandestine removal of goods without stentering was not proven, and the penalties imposed were not sustainable. The Tribunal rejected the Department's appeal and allowed the appeals by the parties involved in the seizure proceedings.Demand relating to past clearances:A demand notice was issued to a company for central excise duty related to past clearances of fabrics without stentering activities. The Addl. Commissioner confirmed the demand and imposed penalties on the company and its director. The Commissioner (Appeals) later allowed the appeals of all three parties, stating that the allegation of clandestine removal without stentering was not proven. The Tribunal considered the submissions from both sides and emphasized that under the compounded levy scheme, actual production was not relevant for determining excise duty. As there was no reliable evidence to support the allegation of goods being cleared without stentering, the Tribunal found the penalties imposed were not sustainable. The Department's appeal was rejected, and the appeals by the parties were allowed with consequential relief.In conclusion, the Tribunal's judgment addressed seizure-related proceedings and demands relating to past clearances, emphasizing the importance of substantiated allegations and evidence in excise duty cases under the compounded levy scheme. The decision provided detailed reasoning for rejecting the Department's appeal and allowing the appeals by the parties involved in the proceedings.