Excise exemption fails without proper accountal; unreliable records and clandestine removal sustained duty, penalty, and extended limitation.

Excise exemption was denied where the claimant failed to maintain reliable contemporaneous records and could not prove actual use of non-duty-paid goods for the intended purpose. The Calcutta Collectorate's jurisdiction was upheld because the goods were received, accounted for, and cleared through the recipient factory within that jurisdiction. Incomplete D-3 declarations, stock discrepancies, and inconsistent records justified an inference of clandestine removal, shifting the burden back to the claimant and defeating the exemption claim. On those findings, the extended limitation period applied, so the duty demand was not time-barred. The demand and penalty were therefore sustained.

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Issues: (i) whether the Collector of Central Excise, Calcutta-I had jurisdiction to demand duty on goods transferred from the appellant's Bombay factories to its Calcutta factory; (ii) whether the appellant had properly accounted for the non-duty-paid goods and whether clandestine removal was established; (iii) whether the duty demand was barred by limitation; and (iv) whether the duty demand and penalty were liable to be set aside.

Issue (i): Whether the Collector of Central Excise, Calcutta-I had jurisdiction to demand duty on goods transferred from the appellant's Bombay factories to its Calcutta factory.

Analysis: The exemption was availed in respect of goods received and accounted for in the Calcutta factory, and the Calcutta Collectorate had exercised control over their receipt, storage, accountal, and clearance. The appellant had maintained records and paid duty through the Calcutta factory, and the verification and proceedings were conducted in relation to the recipient unit within that jurisdiction.

Conclusion: The jurisdictional objection was rejected and the demand by the Calcutta Collectorate was upheld.

Issue (ii): Whether the appellant had properly accounted for the non-duty-paid goods and whether clandestine removal was established.

Analysis: The statutory and trade notice-based records were found to be incomplete, inconsistent, and in several respects not contemporaneous. D-3 declarations were not filed in the relevant periods, stock records were not properly maintained, and the appellant failed to explain numerous discrepancies or produce reliable records to show that the goods were actually used in the manufacture of further excisable goods. In these circumstances, the burden on the claimant to establish exemption was not discharged, and clandestine removal was inferred from the surrounding facts and conduct.

Conclusion: The department successfully established clandestine removal and the appellant's challenge on accountal failed.

Issue (iii): Whether the duty demand was barred by limitation.

Analysis: Since the non-duty-paid goods were held to have been clandestinely removed and the appellant had not shown due accountal or actual use for the intended purpose, the extended period was attracted. The plea that the demand was beyond the normal period was therefore not available on the facts found.

Conclusion: The demand was not time-barred.

Issue (iv): Whether the duty demand and penalty were liable to be set aside.

Analysis: Once the accountal failure, suppression, and clandestine removal were established, the levy of duty and imposition of penalty followed under the governing excise provisions. No ground was made out to interfere with the quantified demand or the penalty imposed.

Conclusion: The demand and penalty were sustained.

Final Conclusion: The appeal failed in full, and the adjudication confirming duty and penalty stood affirmed.

Ratio Decidendi: A claimant to excise exemption must strictly prove proper accountal and actual use of the exempted goods for the intended purpose; where statutory records are unreliable and the surrounding circumstances establish clandestine removal, duty demand, penalty, and the extended limitation period are sustainable.

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