Clandestine removal and assessable value: duty demand upheld, post-clearance price cuts ignored, penalty sustained.

A duty demand is not time-barred where the show-cause notice, read as a whole, alleges suppression, non-accountal and clandestine removal; the absence of a separate year-specific suppression allegation did not defeat the demand. The alleged clearances to the Director General of Supplies & Disposals failed on the correspondence showing no despatch from the factory, so that part of the case was not proved. The remaining allegations of non-accountal and clandestine removal were established through records, invoices, delivery challans, lorry receipts and seized goods, and the assessee did not displace that evidence. Post-clearance price reductions did not change assessable value, and the penalty was sustained.

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Issues: (i) Whether the demand of duty for 1978-79 was barred by limitation; (ii) whether the alleged clearances to the Director General of Supplies & Disposals were proved; (iii) whether the remaining allegations of non-accountal and clandestine removal were established; (iv) whether the valuation objections and penalty challenge were sustainable.

Issue (i): Whether the demand of duty for 1978-79 was barred by limitation.

Analysis: The show-cause notice, read as a whole, alleged suppression of production, non-accountal of clearances, and clandestine removal. The absence of a separate, isolated allegation of suppression for that year did not defeat the demand, because the notice contained specific assertions that the appellants had not accounted for production and had cleared goods clandestinely. The demand was also founded on the relevant provisions of the Central Excise Rules, 1944.

Conclusion: The demand of duty for 1978-79 was not barred by limitation, and the finding was against the assessee.

Issue (ii): Whether the alleged clearances to the Director General of Supplies & Disposals were proved.

Analysis: The correspondence from the Director General of Supplies & Disposals was accepted as showing that there was no despatch from the factory in respect of the alleged supplies. In the absence of contrary evidence, the documentary basis for the allegation failed.

Conclusion: The allegation of supply to the Director General of Supplies & Disposals was not proved, and relief was granted to the assessee on this part.

Issue (iii): Whether the remaining allegations of non-accountal and clandestine removal were established.

Analysis: The appellants' records, invoices, delivery challans, lorry receipts, and seized goods provided substantial circumstantial and documentary evidence of production, removal, and non-accountal. The explanations based on a former employee, alleged fabrication, and alleged lack of investigation were found untenable. The burden of displacing the evidentiary value of the records rested on the appellants and was not discharged.

Conclusion: The remaining allegations of non-accountal and clandestine removal were proved, and the findings were against the assessee.

Issue (iv): Whether the valuation objections and penalty challenge were sustainable.

Analysis: Subsequent reduction of prices after clearance did not affect the excisable assessable value once goods had been cleared on the declared value. In view of the scale of fabrication and fraudulent documentation, the penalty was considered justified.

Conclusion: The valuation objections and challenge to penalty failed, and the findings were against the assessee.

Final Conclusion: The appeal succeeded only to the limited extent of the alleged supplies to the Director General of Supplies & Disposals; in all other respects, the order of the Collector was sustained.

Ratio Decidendi: A demand of duty is not barred where the notice, read as a whole, alleges suppression and clandestine removal, and post-clearance price reductions do not alter the excisable assessable value already declared at the time of removal.

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