2001 (11) TMI 818 - AT - Central Excise

Clandestine removal - Evidence - Burden of proof - Modvat/Cenvat - Modvat on inputs - Demand - Shortages of inputs - Confiscation of goods - Penalty - Personal penalty

Summary

Issues:
1. Confirmation of demand of duty against the main appellant company and imposition of penalties.
2. Seizure of excess goods and shortage of inputs leading to demand of duty.
3. Reliance on entries in the register for duty confirmation.
4. Arguments regarding the nature of entries in the register and burden of proof.
5. Confirmation of demand of duty for inputs found short.
6. Confiscation of excess goods and imposition of fines.
7. Imposition of personal penalty on the authorized signatory.

Issue 1:
The judgment confirmed the demand of duty against the main appellant company, M/s. Sonex Chemicals, amounting to Rs. 1,64,219.38, and imposed penalties totaling Rs. 2,01,218.88. Additionally, a penalty of Rs. 25,000 was imposed on the authorized signatory under Rule 209A of the Central Excise Rules, 1944.

Issue 2:
The Central Excise Officers found excess stock of Acid Slurry and Sulphuric Acid during a visit to the appellant's factory, along with a shortage of Linear Alkyl Benzene (LAB). This led to the seizure of the excess goods and issuance of a show cause notice demanding duty for goods cleared without payment and recovery of credit availed for the inputs found short.

Issue 3:
The authorities relied on entries in a specific register to confirm the duty demand. The register contained entries under the heading "Quantity sold and stock," which the authorized signatory admitted were related to sales that missed Central Excise Invoices.

Issue 4:
The appellant argued that the entries in the register were for planning purposes and did not reflect actual sales. They contended that the burden of proof lay with the Revenue to show goods were cleared without duty payment. However, the Tribunal found the entries to be significant in determining duty liability, shifting the burden to the appellants to explain the entries.

Issue 5:
The demand of duty for inputs found short was confirmed as the appellants failed to provide a satisfactory explanation for the shortages while operating under the Modvat Scheme.

Issue 6:
The excess goods were confiscated under Rule 173Q, with a fine imposed. However, the Tribunal set aside the confiscation based on a precedent that confiscation under Rule 173Q was not applicable, recommending confiscation under Rule 226 instead.

Issue 7:
The personal penalty imposed on the authorized signatory was set aside as the Additional Commissioner did not establish the conditions for invoking Rule 209A satisfactorily.

In conclusion, the judgment upheld the duty demand against the appellant company, confirmed the duty for inputs found short, set aside the confiscation of excess goods, and annulled the personal penalty on the authorized signatory.