2003 (11) TMI 525 - AT - Central Excise

Summary

Issues:
- Allegations of clandestine production and clearance of goods by M/s. SSPL.
- Liability of M/s. KSPL for receiving goods without payment of duty.
- Penalties imposed on various individuals associated with M/s. SSPL and M/s. KSPL.
- Discrepancies in determining excess production and clandestine clearances.

Analysis:
1. Allegations of Clandestine Production and Clearance:
- M/s. SSPL faced accusations of clandestinely producing M.S. Ingots without proper documentation and clearing them without paying duty amounting to Rs. 46,09,799/-. The investigation revealed discrepancies in recording production in official records, leading to suppressed quantities being cleared clandestinely. The Commissioner's order was based on private registers, heat registers, and ingot movement registers recovered during the investigation.

2. Liability of M/s. KSPL:
- M/s. KSPL was found to have received M.S. Ingots from M/s. SSPL without payment of duty and proper documentation, rendering them liable for penalties under Rule 209A of the Central Excise Rules. The involvement of Shri M. Seetharama Rao, General Manager of M/s. KSPL, in receiving illicitly removed ingots was highlighted, leading to penalties being imposed on the company and individuals associated with it.

3. Penalties Imposed:
- The Commissioner imposed substantial penalties on M/s. SSPL, M/s. KSPL, Shri N. Krishna Rao, and Shri M. Seetharama Rao under Rule 209A of the Central Excise Rules. The penalties amounted to Rs. 40 lakhs on M/s. SSPL, Rs. 6 lakhs on M/s. KSPL, Rs. 10 lakhs on Shri N. Krishna Rao, and Rs. 1 lakh on Shri M. Seetharama Rao. These penalties were a result of their involvement in the alleged clandestine activities.

4. Discrepancies in Determining Excess Production:
- The appellants contested the method used by the Department to determine excess production, arguing that the capacity of the furnace was inaccurately assessed. They highlighted that the production capacity of the furnace, as per the manufacturer's invoice, was 2.1 MTs, and this capacity was accepted by the Commissioner. The appellants questioned how they could produce excess quantities beyond the furnace's capacity, which were allegedly cleared clandestinely.

5. Judgment and Remand:
- The Tribunal set aside the Commissioner's order and remanded the matter for re-examination. The re-determination of clandestine production and clearance was deemed necessary, considering the production capacity of the factory and related documents. The Tribunal emphasized the importance of reassessing the evidence and re-adjudicating the case based on accurate assessments of production and clearances.