2004 (3) TMI 583 - AT - Central Excise

Summary

Issues:
- Appeal against Order-in-Appeal No. 58/99 (H-II) CE, dated 31-8-1999
- Allegations of clandestine manufacturing and removal of aerated waters without duty payment
- Shortage of crates of Bisleri Soda and Thumsup, excess units of essence of Limca and Thumsup
- Demand of duty under Rule 9(2) of the Central Excise Rules, 1944
- Confiscation of goods and imposition of penalty
- Contestation of demand based on requisition slips
- Evidence of clandestine production and removal
- Consideration of process loss in duty calculation
- Claim of duty calculation on cum-duty value

Analysis:

The appeal before the Appellate Tribunal CESTAT, Bangalore involved a case where M/s. Annapurna Industries Ltd. contested the Order-in-Appeal alleging clandestine manufacturing and removal of aerated waters without duty payment. Central Excise officers found discrepancies in stock during a factory visit, leading to a demand of duty and confiscation of goods. The appellant challenged the demand primarily based on the requisition slips, arguing that they did not directly prove clandestine activities, citing various legal precedents. The appellant emphasized that the requisition slips did not conclusively establish excess production and removal of goods. However, the Revenue maintained that the requisition slips indicated unaccounted production and removal, supported by shortages of raw materials. The Tribunal noted discrepancies in raw material accounting, shortages of specific items, and acceptance of sale proceeds for clandestinely removed goods by the appellant's President.

The Tribunal carefully considered both sides' arguments and evidence. It concluded that the Department's reliance on requisition slips, along with other circumstances, sufficiently demonstrated clandestine production and removal. The Tribunal highlighted the failure to account for raw materials and shortages as indicators of unrecorded production and evasion of duty. The appellant's admission of irregularities and willingness to pay the demanded duty further supported the Revenue's case. The Tribunal rejected the appellant's claim of insufficient evidence and upheld the duty demand based on the raw materials received and production cleared without accounting.

Regarding the process loss, the Tribunal acknowledged the appellant's claim and reduced the duty amount demanded by the lower authorities to account for a 15% process loss. However, the Tribunal dismissed the appellant's assertion of duty calculation on cum-duty price, stating that no evidence supported this claim. The Tribunal clarified that duty was calculated based on assessable value, not cum-duty price. Ultimately, the Tribunal modified the duty amount to Rs. 8,63,279.24 after considering the process loss but rejected the appeal in all other aspects.