2004 (2) TMI 153 - AT - Central Excise

Tribunal remands duty demand for fresh adjudication, penalties overturned, confiscations vacated

WHALE STATIONERY PRODUCTS LTD. Versus COMMISSIONER OF C. EX., MEERUT

WHALE STATIONERY PRODUCTS LTD. Versus COMMISSIONER OF C. EX., MEERUT - 2004 (168) E.L.T. 405 (Tri. - Del.) Issues Involved:(a) Whether during 1995-96 and 1996-97 Unit-I cleared excisable goods clandestinely without payment of duty amounting to Rs. 25.78 lakhsRs.(b) Whether the goods cleared under the brand name 'Whale' by Units I and II of the appellant-company during the relevant periods were eligible for the benefit of SSI exemption under Notification No. 1/93-C.E. (as amended)Rs.(c) Whether M/s. DPPCL and M/s. WOInc. were 'related persons', for the appellant-company, in terms of Section 4(4)(c) of the Central Excise ActRs.(d) Whether any excisable goods chargeable to duty amounting to Rs. 24,804/- were cleared by Unit-II under gate passes No. 58, dated 25-11-97 and No. 63, dated 4-12-97 without payment of duty.Issue-wise Analysis:(a) Clandestine Clearance of Excisable Goods by Unit-I:The primary contention was whether Unit-I cleared excisable goods clandestinely without payment of duty amounting to Rs. 25.78 lakhs during 1995-96 and 1996-97. The adjudicating authority based its findings on the difference between the value of clearances as per the Balance Sheets and Rule 173B declarations. The appellant argued that the differences were due to trading activities through their Delhi office, not manufacturing sales. Evidence provided included audit reports, revised notes, and assessment orders from tax authorities, which the adjudicating authority allegedly did not consider. The Tribunal found merit in the appellant's arguments and remanded the matter for fresh adjudication, instructing the adjudicating authority to re-examine all evidence and contentions.(b) Eligibility for SSI Exemption under Notification No. 1/93-C.E.:The issue was whether the goods cleared under the brand name 'Whale' by Units I and II were eligible for SSI exemption. The Tribunal noted that the brand name 'Whale' was registered in the appellant-company's name effective from 4th November 1996. Since the goods were cleared under their own brand name and not another's, the bar in Para 4 of Notification No. 1/93-C.E. did not apply. Consequently, the demands of Rs. 10.42 lakhs, Rs. 4.38 lakhs, Rs. 7.76 lakhs, and Rs. 5.44 lakhs were not sustainable.(c) Determination of Related Persons:The Commissioner had rejected the transaction value of goods cleared by Unit-I to M/s. DPPCL and M/s. WOInc., holding them as related persons. The Tribunal found no evidence of mutuality of interest between the appellant-company and the other two companies. The companies operated as independent entities, and the higher discount given to DPPCL and WOInc. was due to them being bulk buyers, not due to any special relationship. The Tribunal held that the transaction value should be accepted, and the demand of Rs. 2.88 lakhs was not sustainable.(d) Clearance of Excisable Goods without Payment of Duty:The demand of Rs. 24,804/- against Unit-II was based on the clearance of goods under two gate passes without payment of duty. The Tribunal upheld the Commissioner's decision, noting that the confessional statement of Shri Ashok Singh and documentary evidence were sufficient to establish clandestine removal of goods.Penalties and Fines:The Tribunal set aside the penalties imposed on Units-I and II, the confiscation of land, buildings, and machinery, and the personal penalty on Shri Mukesh Gupta. The Tribunal also dismissed the Revenue's appeal for interest under Section 11AB and penalty under Section 11AC, except for the issue remanded for fresh adjudication.Conclusion:(a) The demand of Rs. 25.78 lakhs against Unit-I was remanded for fresh adjudication.(b) All other demands of duty, except Rs. 24,804/-, were set aside.(c) Penalties and confiscations were vacated, and the personal penalty on Shri Mukesh Gupta was set aside.(d) The Tribunal directed the Commissioner to re-adjudicate the matter in light of the Tribunal's findings.