2005 (1) TMI 251 - AT - Central Excise

Tribunal Annuls Most Duty Demands; Reduces Redemption Fine and Company Penalty; Dismisses Other Penalties.

The Tribunal annulled most demands of duty, except for Rs. 91,119/- related to raw material shortages. Confiscation of finished goods was upheld, but the ... Duty Demand - Clandestine removal - Evidence - confiscation of seized finished goods found in excess - evasion of duty based on 143 invoices - shortage of raw-material - whether the goods were received by them since no statement of any buyer had been brought on record - HELD THAT:- In the present matter, the statements and the invoices have remained uncorroborated by any independent unimpeachable evidence, such as purchase of raw-materials/consumption of electricity/purchase of goods by buyers, etc. In view of these facts and circumstances, the Revenue has not succeeded in proving the allegation of clandestine manufacture and clearance of pipes by the appellants on the basis of 143 invoices in question. We, therefore, set aside the demand of duty on this count. Regarding goods found in Thoria godown, the demand again has been confirmed on the basis of statements only without verifying their truthfulness as the cross examination has been denied. On the other hand, the appellants have claimed to have purchased those goods from market for which payment was made through crossed cheques. As the Adjudicating Authority has not even discussed the evidence furnished by the appellants what to talk of rebutting the same, demand of duty cannot be sustained. We, therefore, set aside the demand of Rs. 2,94,713/-. The excess stock of finished goods lying in the factory is liable to confiscation as the same was not recorded in the statutory records. The contention of the appellants that excess goods were the production of 8-9-1998 and 9-9-1998 has not been substantiated by them. The redemption fine of Rs. 3,00,000/- imposed by the Commissioner is on the higher side which is reduced to Rs. 1,50,000/-. The appellants are directed to enter the said stock in their R.G. I Register and pay the duty of excise while clearing the same. Similarly, the appellants have not accounted for satisfactorily the shortage of raw-material and the duty of Rs. 91,119/- is, therefore, upheld. Regarding duty demands of Rs. 52,500/- and Rs. 63,253/-. The allegation is that the goods were removed for weighment but these were not returned to the factory subsequently. The Appellants have contended that the weighing slips have not been recovered from them and do not mention about their names. They have also contended that quantity of 625 M.T. and 1400 M.T. had been removed by two trucks which is impossible. In absence of any corroboration, these demands are also not sustainable and, therefore, are set aside. Demand of duty amounting to Rs. 36,888/-, is set aside as the Revenue has not brought on record any material to controvert the challan of Swastik Trading Company which had sent the goods for job work (end facing). Regarding duty of Rs. 1,38,225/- based on two slips dated 5-9-1998 and 9-9-1998, the contentions of the respondents are that these slips indicated proposal for despatch which could not be implemented. There is force in the submissions of the Appellants as one slip is dated 9-9-1998 itself for the day officers visited the factory for search. If the goods had been removed the same day, the same should have been intercepted at the premises of the buyers. The Revenue has relied upon the statement dated 1-2-1999 of Sh. S.K Sharma in which he has mentioned that the goods had been despatched. But he had not been asked the names of the customers and mode of transport etc. No statement of any driver/transporter is also brought on record to show the despatch of these goods. We, therefore, set aside this demand also. Thus, we set aside all the demands of duty confirmed in the impugned order except the demand of duty amounting to Rs. 91,119/-. We uphold the confiscation of finished goods found in the factory. The redemption fine is, however, reduced to Rs. 1.50 lakh. Accordingly, the penalty on the Appellant Company is reduced to Rs. one lakh only. Penalties imposed on other Appellants are set aside. All the appeals are disposed of in above manner. Issues Involved:1. Demand of Central Excise duty and penalty.2. Confiscation of goods found in outside godowns.3. Alleged clandestine removal of goods.4. Shortage of raw-materials.5. Penalties imposed on the Appellants.Summary:1. Demand of Central Excise Duty and Penalty:The Appellants challenged the demand of Central Excise duty and penalty imposed by the Commissioner. The main allegation was based on 143 invoices and various statements recorded by the Revenue. The Tribunal found that the Revenue did not make sufficient efforts to verify the receipt of goods by the consignees mentioned in the invoices. There was no corroborative evidence regarding the purchase of raw materials or the consumption of electricity that would support the allegation of clandestine removal. The Tribunal set aside the demand of duty on this count, stating that the charge of clandestine removal must be proved by positive evidence, not by assumptions and presumptions.2. Confiscation of Goods Found in Outside Godowns:The demand of Rs. 2,94,713/- was confirmed based on statements without verifying their truthfulness, and cross-examination was denied. The Appellants claimed to have purchased the goods from the market, paying through crossed cheques. The Adjudicating Authority did not discuss or rebut this evidence. Therefore, the demand was set aside.3. Alleged Clandestine Removal of Goods:The Tribunal found that the statements and invoices remained uncorroborated by any independent evidence. There was no proof of actual removal of goods from the factory without payment of duty. The Tribunal emphasized that no show cause notice or order could be based on assumptions and presumptions. Consequently, the demand of duty based on alleged clandestine removal was set aside.4. Shortage of Raw-Materials:The shortage of raw-materials was not satisfactorily accounted for by the Appellants. Therefore, the duty demand of Rs. 91,119/- was upheld.5. Penalties Imposed on the Appellants:The Tribunal found that the penalty imposed on the Appellant Company was excessive and reduced it to Rs. one lakh. Penalties imposed on other Appellants were set aside.Conclusion:The Tribunal set aside all demands of duty confirmed in the impugned order except for the demand of Rs. 91,119/-. The confiscation of finished goods found in the factory was upheld, but the redemption fine was reduced to Rs. 1.50 lakh. All appeals were disposed of accordingly.