2004 (5) TMI 498 - AT - Central Excise

Summary

Issues:
Confirmation of demand of duty and penalty based on alleged shortage of processed fabrics. Challenge to impugned order citing lack of evidence and reliance on previous tribunal decisions. Admission of duty liability by the Director. Submissions by both parties regarding the shortages detected during stock taking.

Confirmation of Demand of Duty and Penalty:
The authorities confirmed a duty demand of Rs. 1,25,769 against a textile processing unit, along with an equal penalty, based on the alleged clearance of 28,898 meters of processed fabrics. The shortage was detected during a visit to the factory, supported by a statement from the partner of the unit. Additionally, a personal penalty of Rs. 50,000 was imposed on the partner. The appellants contested the order, claiming the shortages were not real, citing lack of evidence such as work sheets, calculations, or employee statements indicating clandestine removal. They argued that the conclusion lacked justification and referenced previous tribunal decisions to support their case.

Challenge to Impugned Order and Lack of Evidence:
The appellants argued that the shortages were not genuine, highlighting the absence of detailed records or inventory to accurately determine the alleged shortages. They contended that the visiting officers did not consider fabrics at various processing stages. The statement of the partner, admitting the shortage but denying malicious intent, was not deemed as an admission of clearing goods without duty payment. The tribunal noted the necessity of proving clandestine removal charges beyond doubt, requiring substantial evidence, which was lacking in this case. Consequently, the benefit of doubt was extended to the appellants, leading to the setting aside of the impugned order and granting relief to the appellants.

Director's Admission of Duty Liability:
The Revenue argued that the Director admitted duty liability and partially paid the amount during the visit. However, the tribunal considered the overall submissions and evidence, ultimately finding in favor of the appellants due to insufficient proof of clandestine processing and removal of fabrics. The lack of concrete evidence regarding the alleged misconduct led to the decision to set aside the impugned order and provide relief to the appellants.

Stock Taking and Lack of Inventory Maintenance:
The tribunal acknowledged the appellants' objections regarding the stock taking process and the absence of detailed inventory maintenance, which could have affected the accuracy of the shortage determination. It was emphasized that a thorough measurement and documentation process was necessary to establish the exact quantity of fabrics. The tribunal found merit in the appellants' contentions, highlighting the importance of maintaining proper records and conducting comprehensive investigations to substantiate duty demands and penalties.