2003 (12) TMI 503 - AT - Central Excise

Summary

Issues:
1. Confirmation of demand of duty and penalties by the Commissioner of Central Excise.
2. Allegations of clandestine manufacture and removal of final products.
3. Statements of employees and proprietor as evidence.
4. Multiplication of sales by four for duty calculation.
5. Consideration of trading activity by the appellant.
6. Retractions of statements by employees.
7. Documentary evidence supporting clandestine removal charge.

Analysis:
1. The Commissioner confirmed a duty demand of Rs. 58,26,784 against the appellants for alleged clandestine manufacture and removal of final products. Additionally, penalties under Section 11AC of the Central Excise Act, 1944 and Rule 173Q of the Central Excise Rules, 1944 were imposed, with an option for the appellant company to redeem confiscated goods on payment of Rs. 2.50 lakh.

2. The appellants, engaged in manufacturing ball bearings and roller bearings, were found with unaccounted raw materials and semi-finished goods during a visit by Central Excise Officers. Statements from employees and the proprietor indicated discrepancies in production and dispatch practices, leading to the suspicion of clandestine activities.

3. The Commissioner relied on statements of employees and the proprietor, corroborated by documentary evidence, to support the charge of clandestine removal. Retractions of statements were dismissed, and the evidence was deemed sufficient to establish the offense.

4. The Commissioner's method of multiplying sales by four for duty calculation was challenged by the appellants, arguing that only specific parties were involved in clandestine activities, not all customers. The Tribunal found merit in this argument and remanded the matter for a fresh adjudication, directing a more specific assessment of duty liability.

5. The appellant's trading activity in ball bearings was not adequately considered by the adjudicating authority, leading to a plea for reconsideration, which was not addressed. The Tribunal did not provide a specific ruling on this issue but focused on the duty calculation method.

6. The retractions of statements by employees were deemed mechanical and insufficient to invalidate the initial admissions of clandestine activities. The Tribunal upheld the significance of the original statements in conjunction with other evidence.

7. Documentary evidence recovered during the visit to the appellant's premises further supported the charge of clandestine removal, showing sales of ball bearings without proper documentation. This evidence, combined with employee statements, formed a substantial basis for confirming the duty demand and penalties.

In conclusion, the Tribunal set aside the impugned order and remanded the matter for a fresh adjudication to determine duty liability more accurately based on specific clandestine activities. The penalty quantum would also be reassessed accordingly.