2003 (3) TMI 626 - AT - Central Excise

Summary

Issues:
1. Confirmation of duty demand for clandestine removal of plywood.
2. Confiscation of excess plywood and redemption fine.
3. Imposition of penalties under Section 11AC and Rule 173Q.
4. Confirmation of interest under Section 11AB of Central Excise Act, 1944.
5. Comparison of entries in private note-book with statutory records.
6. Statements of company representative and physical stock verification.
7. Show cause notice and orders passed by authorities below.
8. Arguments presented by the Appellant's consultant and Revenue's representative.
9. Analysis of evidence and decision on duty demand, penalties, and confiscation.

Analysis:
1. The authorities confirmed a duty demand of Rs. 1,47,601 against the appellants for clandestine removal of plywood and confiscated 5,965.55 Sq.mm of excess plywood with an option for redemption on payment of Rs. 40,000. Penalties were imposed under Section 11AC and Rule 173Q, along with interest under Section 11AB of the Central Excise Act, 1944.

2. During a visit to the factory, officers found discrepancies between entries in a private note-book and statutory records regarding the quantity of plywood dispatched. The company representative admitted the discrepancies and shortages in stock, leading to the issuance of a show cause notice for clandestine removal, duty demand, penalties, and confiscation of excess plywood.

3. The consultant for the appellants argued that entries in the note-book reflected customer orders, explaining the quantity differences in invoices. He questioned the lack of interrogation of another employee and customer verification. The Revenue's representative countered, stating that the note-book entries matched invoices except for quantities, indicating clandestine removal.

4. The judgment analyzed the entries in the note-book, finding discrepancies in quantities compared to invoices, supporting the Revenue's case of clandestine removal. The consultant's arguments were deemed unconvincing, and the representative's admission of lapses further strengthened the Revenue's case. The duty demand was confirmed, with a reduced penalty under Section 11AC.

5. The judgment set aside the penalty under Rule 173Q but upheld the duty demand based on conclusive evidence from the note-book entries and the company representative's statement. The confiscation of excess plywood was overturned due to lack of evidence for clandestine removal preparations. The appeal was disposed of accordingly.