2004 (4) TMI 413 - AT - Central Excise

Demand - Clandestine removal - Evidence - Confiscation of goods - Non-accountal of goods - Penalty - HELD THAT - The entire case of Revenue is based upon non-completion of grey fabric register maintained by the appellant. As contended by the ld. Consultant, if the appellant was having any mala fide intention to clear goods without payment, he would have not made entries of receipt of grey fabric in the register. The allegations of clandestine manufacture and removal of final product are required to be substantiated by production of some positive evidence, which is absent in the present case. Even the statement of the partner is not in the nature of any admission of having cleared the goods without payment of duty. As such I am in agreement with the appellant s contention that demand of duty on this ground is not sustainable. As regards the confiscation of seized goods the appellant have taken a stand that the same was production of the day of the visit of the officers and has to be entered in the R.G. 1 register at the end of the day. The above stand was taken in the very first statement before the Revenue. It is the contention of the ld. Consultant that the fabrics in question are only half day s production of the unit. The above stand has not been rebutted by the authorities. As such, I do not find any justification in confiscation of the goods. As regards penalty on second appellants , No justification found for imposition of the same inasmuch as the duty demand for clandestine removal has been set aside. However, I find that the appellant had not maintained proper entry in their grey fabric register which invite penal action under the provisions of Rule 226 of Central Excise Rules. Accordingly, I reduce the penalty to Rs. 2,000/- under the said section on M/s. Vakharia Traders. Penalty on Shri Biren H. Vakharia is set aside in toto. The appeals are disposed of in above terms.

Summary

Issues:
1. Confiscation of man-made fabric for not being entered in R.G. 1 Register.
2. Duty confirmation for clandestine removal of man-made fabric.
3. Imposition of penalties under Rule 209A of Central Excise Rules, 1944.

Confiscation of Man-made Fabric:
The Joint Commissioner confiscated 123 pieces of man-made fabric from the appellant's factory as they were not entered in the R.G. 1 Register during a visit by Central Excise Officers. The appellant could redeem the fabric by paying a fine of Rs. 70,000. The appellant argued that there was no evidence besides incomplete record-keeping to prove clandestine removal. The Tribunal agreed, noting that the Revenue failed to provide tangible evidence of clandestine removal. The appellant's claim that the confiscated fabric was part of the day's production and should have been entered in the register by day-end was accepted. The Tribunal found no justification for the confiscation.

Duty Confirmation for Clandestine Removal:
The Revenue confirmed duty of Rs. 1,68,030 on the appellant for allegedly clandestinely removing 590 pieces of man-made fabric. The appellant contended that without concrete evidence, the duty demand was baseless. The Tribunal agreed, stating that the Revenue failed to substantiate the allegations of clandestine removal with positive evidence. The statement of the partner did not amount to an admission of clearing goods without paying duty. Consequently, the duty demand was deemed unsustainable.

Imposition of Penalties:
Penalties under Rule 209A of Central Excise Rules, 1944 were imposed on M/s. Vakharia Traders and the partner for improper record maintenance. The appellant argued that penalties were excessive, and the Tribunal agreed. The penalties were reduced to Rs. 2,000 on M/s. Vakharia Traders for inadequate record-keeping. The penalty on the partner was entirely set aside due to the lack of justification. The Tribunal disposed of the appeals accordingly.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Mumbai highlights the issues of confiscation of fabric, duty confirmation for clandestine removal, and imposition of penalties under Rule 209A of Central Excise Rules, 1944. The Tribunal found in favor of the appellant on the grounds of lack of concrete evidence for clandestine removal and improper record-keeping, leading to reductions in penalties and setting aside duty demands and confiscation.