1998 (9) TMI 598 - AT - Central Excise

Clandestine removal - Interest and penalty - Valuation - Remand - Confiscation - Cenvat/Modvat - Stay/Dispensation of pre-deposit - Removal - Deposit on remand - Appeal

Summary

Issues:
1. Failure to follow Central Excise procedures and pay Central Excise Duty.
2. Seizure of goods and truck, deposit of Rs. 20 lakhs towards Excise Duty.
3. Confirmation of Duty demand, confiscation of goods and truck, imposition of penalties.
4. Challenge to quantum of duty, deductions for freight, sales tax, insurance, and Excise Duty.
5. Imposition of penalty under Section 11AC and interest under Section 11AB.
6. Reconsideration of penalty and interest, deductions for sales tax, freight charges, and Excise Duty.
7. Verification of documents for deductions, allowance of sales tax deduction in determining assessable value.
8. Examination of records for deductions, consideration of Modvat credit benefit.
9. Deposit of penalty amount by the manufacturer.
10. Setting aside of duty quantification, penalties under rules, penalty under Section 11AC, and interest under Section 11AB.
11. Remand for fresh order, opportunity for producing relevant documents, deposit of Rs. 1 lakh by the manufacturer.

Detailed Analysis:

1. The case involved the failure of the appellant, a manufacturer, to adhere to Central Excise procedures and pay Central Excise Duty while manufacturing Pressure Cookers and Pressure Pans for home consumption from 1-4-1994 to 30-8-1996. Surveillance revealed the non-compliance, leading to the interception of a truck loaded with goods. The Director of the manufacturer failed to provide a satisfactory explanation for the lapses, resulting in the seizure of goods and the truck.

2. Following the seizure, the manufacturer deposited Rs. 20 lakhs towards the Excise Duty owed. A show cause notice was issued, alleging total suppression of facts to evade Duty and failure to follow procedures. The Commissioner confirmed the Duty demand, directed confiscation of seized goods and the truck, and imposed penalties and interest on the manufacturer and the Director.

3. The appellants challenged the quantum of duty, claiming deductions for freight, sales tax, insurance, and Excise Duty, which, if allowed, would reduce the duty liability. They also contested the penalties imposed under Section 11AC and interest under Section 11AB, citing the inapplicability of these provisions to the period in question.

4. The Tribunal agreed that the penalties under Section 11AC and interest under Section 11AB were unsustainable. It directed the Commissioner to reconsider the deductions claimed by the appellants, especially for sales tax, emphasizing that sales tax paid subsequently should be deducted to determine the assessable value accurately.

5. The Commissioner was instructed to examine the records provided by the appellants to determine the deductions for freight charges and Excise Duty in calculating the assessable value. Additionally, the benefit of Modvat credit, which the manufacturer could have availed but did not due to non-compliance, was to be considered in the revised order.

6. The Tribunal set aside the impugned order regarding duty quantification, penalties under rules, penalty under Section 11AC, and interest under Section 11AB. However, the order related to confiscation was upheld. The case was remanded for a fresh order, allowing the appellants to produce relevant documents and deposit a sum of Rs. 1 lakh as directed.