2000 (1) TMI 758 - AT - Central Excise

Summary

Issues Involved:

1. Confiscation and penalty under Rule 9(2) of the CE Rules, read with Section 11A(1) of the CE Act, 1944.
2. Discrepancies in stock records and physical verification.
3. Incriminating statements and admissions by various individuals.
4. Allegations of clandestine removal of beedies without payment of duty.
5. Appellant's defense and allegations of coercion in obtaining statements.
6. Calculation of duty, including errors in considering non-working days.
7. Penalty imposition and its quantum.

Issue-wise Detailed Analysis:

1. Confiscation and Penalty:
The appeal arises from an order confirming the duty of Rs. 4,60,444.50 against the appellant, the proprietor of M/s. Aysha Beedi Works, under Rule 9(2) of the CE Rules, read with Section 11A(1) of the CE Act, 1944. Two lakh beedies were held liable for confiscation, and the sale proceeds of Rs. 3,810/- were appropriated towards fine in lieu of confiscation. A penalty of Rs. 50,000/- was imposed on the appellant, with additional penalties of Rs. 500/- each on two other individuals who did not appeal.

2. Discrepancies in Stock Records:
Upon search and verification of the appellant's premises on 10-8-87, discrepancies were found between the RG 12A register and physical stock. The register showed 92,000 labelled and 2,06,525 unlabelled beedies, while physical verification revealed 97,000 labelled and 1,51,900 unlabelled beedies. Similarly, the recorded stock of beedi tobacco was 1,862.50 Kgs, but physical stock was 1,800 Kgs. The Collector noted these discrepancies as evidence of unaccounted production and removal of beedies.

3. Incriminating Statements:
Several individuals, including the appellant's sons, the accountant, and other workers, provided incriminating statements admitting the removal of beedies without documents and payment of duty. These statements were corroborated by each other and supported the charges of clandestine removal.

4. Allegations of Clandestine Removal:
The appellant was charged with contravention of various CE Rules for clearing 11,36,90,666 labelled beedies from 2/83 to 9-8-87 by suppressing production and clandestine removal to evade duty. The Collector meticulously discussed the evidence, including admissions by the appellant and others, and concluded that the clandestine removal was proven beyond doubt.

5. Appellant's Defense:
The appellant denied the allegations, claiming the statements were obtained under threat and coercion. The appellant argued there was no documentary evidence of tobacco purchase or beedi sale, and the duty calculation was incorrect due to erroneous assumptions about worker strength and factory operation days. The Collector found these defenses unconvincing, noting that the affidavits filed by the appellant did not effectively retract the earlier admissions.

6. Calculation of Duty:
The appellant contested the duty calculation, arguing it included Sundays and holidays when the factory was not operational. The Tribunal acknowledged this error and directed the Collector to recalculate the duty, excluding non-working days, and to provide the appellant an opportunity to be heard on this matter.

7. Penalty Imposition:
The Tribunal upheld the penalty but reduced it from Rs. 50,000/- to Rs. 40,000/-, considering the overall facts and circumstances. The appeal was otherwise rejected on merits, confirming the Collector's findings and conclusions.

Conclusion:
The Tribunal found the Collector's order to be detailed and well-reasoned, with clear evidence supporting the charges of clandestine removal and duty evasion. The only relief granted was the recalculation of duty to exclude non-working days, and a reduction in the penalty amount. The appeal was otherwise dismissed, affirming the confiscation, duty demand, and penalties imposed.