2003 (4) TMI 310 - Commission - Central Excise

Summary

Issues Involved:

1. Alleged clandestine manufacture and clearance of dutiable cotton cone yarn.
2. Dispute over duty liability and value of clearances.
3. Confiscation of cash seized from the main applicant's premises.
4. Immunity from prosecution, penalty, and interest.

Issue-wise Detailed Analysis:

1. Alleged Clandestine Manufacture and Clearance:

The main applicant, registered for manufacturing cotton yarn, was alleged to have used unaccounted raw cotton for clandestine manufacture and clearance of dutiable cotton cone yarn between 15-10-98 and 18-6-2000. The SCN proposed a duty demand of Rs. 40,25,813/- based on the value of clearances amounting to Rs. 4,49,55,711/-. The SCN included detailed annexures (D1, D2, and D4) specifying the value of clearances and the corresponding duty.

2. Dispute Over Duty Liability and Value of Clearances:

The main applicant admitted to a duty liability of Rs. 21,57,519/-, seeking abatements under Section 4(4)(d)(ii) of the Central Excise Act, 1944. The applicant accepted the entire duty liability of Rs. 4,07,300/- from Annexure D4 and Rs. 8,38,686/- from Annexure D1, disputing only Rs. 61,410/-. The Revenue conceded the deletion of this disputed amount. The applicant also disputed Rs. 17,09,521/- from the duty amount of Rs. 27,18,417/- in Annexure D2, with the Revenue conceding duplication for Rs. 4,81,298/-. The Bench found it difficult to uphold a demand based solely on a third party's private diary without corroborative evidence and dropped the duty demand of Rs. 17,09,521/-.

3. Confiscation of Cash Seized:

The SCN proposed the confiscation of Rs. 15,79,943/- seized from the main applicant's premises under Section 121 of the Customs Act, alleging it to be the sale proceeds of clandestinely manufactured and cleared yarn. The applicant contended that the onus of proof lay with the Revenue, which failed to establish the connection between the seized cash and the duty-evaded goods. The Bench agreed with the applicant, noting the lack of credible evidence and ordered the release of the seized cash.

4. Immunity from Prosecution, Penalty, and Interest:

The applicant sought immunity from prosecution under the Central Excise Act, IPC, Income-tax Act, and other Central enactments, and waiver of interest, fine, and penalty. The Bench granted immunity from prosecution, penalty, and interest under the Central Excise Act and Rules, noting the applicant's cooperation and the wrongful retention of the seized cash. Immunity from prosecution under other Central enactments was not granted due to lack of specific details. The co-applicants were also granted immunity from penalty and prosecution.

Judgment Summary:

The applications were settled under Section 32F(7) of the Central Excise Act, 1944, with the following terms:
- Duty liability settled at Rs. 20,53,273/-, subject to the applicant discharging the Sales Tax of Rs. 9,88,709/- and filing evidence within 45 days.
- Immunity granted from prosecution, penalty, and interest under the Central Excise Act and Rules.
- Seized cash of Rs. 15,79,943/- ordered to be released.
- Immunity from penalty and prosecution extended to the co-applicants.

All immunities were granted under Section 32K of the Central Excise Act, 1944, with provisions for withdrawal if any material for settlement was withheld or fraudulent means employed.