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2002 (5) TMI 792 - AT - Central ExciseDemand - Returned goods cleared after repair - Evidence - Adjudication - Demand - Show cause notice
Issues Involved:
1. Filing of D-3 intimation without the receipt of rejected goods and removal of fresh goods. 2. Removal of goods under the pretext of repaired goods when rejected goods could not be repaired. 3. Receipt of rejected goods beyond the stipulated period and procedural violations. Detailed Analysis: Issue 1: Filing of D-3 Intimation Without Receipt of Rejected Goods and Removal of Fresh Goods The appellants, M/s. ABL, argued that the rejected goods were received and reprocessed before being despatched without payment of duty. They claimed the goods were despatched from Delhi under Lorry Receipt (LR) No. 159403 of Patel Roadways, which was allegedly lost. However, they failed to provide corroborative evidence or an affidavit to support the missing LR claim. The department relied on a letter dated 27-8-91 from Shri N. Sridhar, which indicated new bearings were despatched as replacements without receiving the defective goods. The private records corroborated this letter, revealing a modus operandi of citing bogus LR numbers to remove fresh goods without reprocessing the defective ones. The Tribunal found the appellants' defense unsatisfactory and upheld the duty demand of Rs. 2,86,652/- for this issue, confirming the extended period was correctly invoked due to deliberate misdeclaration. Issue 2: Removal of Goods Under the Pretext of Repaired Goods When Rejected Goods Could Not Be Repaired The appellants contended that the rejected bearings related to 17 D-3 numbers listed in the show cause notice were rectified and re-despatched. They argued that credit notes issued were not directly connected to the rectifiable or non-rectifiable nature of the rejected goods. However, they failed to provide evidence to support this claim. The department demanded Rs. 2,11,140.94, but the appellants argued that the duty should only be Rs. 48,076.22 based on the 17 D-3 numbers cited in the show cause notice. The Tribunal agreed that the duty demand should not exceed the scope of the show cause notice and remanded the matter to the original authority for recalculating the duty based on the 17 D-3 numbers listed. Issue 3: Receipt of Rejected Goods Beyond the Stipulated Period and Procedural Violations The appellants admitted to a technical lapse but argued it was not intentional. The adjudicating authority found that the appellants intentionally entered wrong particulars to show timely receipt of goods, indicating a deliberate intention to misuse the law. The Tribunal upheld this finding, agreeing that the procedural violations were intentional. Penalty The total duty demanded was Rs. 4,97,792.94, and a penalty of Rs. 5,00,000/- was imposed for contravening Rules 9(2), 173Q, 210, and 226 of the C.E. Rules, 1944. The Tribunal found the penalty harsh and excessive, particularly since the duty for the second issue needed recalculating. The penalty was ordered to be re-fixed in proportion to the total duty evaded. Conclusion The Tribunal confirmed the duty demand of Rs. 2,86,652/- for the first issue, remanded the second issue for recalculating the duty, upheld the procedural violation finding for the third issue, and directed the penalty to be re-fixed based on the re-determined duty. The appeal was disposed of accordingly.
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