2004 (7) TMI 570 - AT - Central Excise

Summary

Issues:
1. Duty liability on HDPE woven fabrics cleared clandestinely.
2. Confiscation and redemption fine of seized goods.
3. Penalty imposition on company director and supervisor.
4. Non-accountal of finished goods in RG1 register.

Analysis:

Issue 1: Duty liability on HDPE woven fabrics cleared clandestinely
The appellant's appeal challenged the order-in-original imposing duty, penalty, and confiscation of HDPE woven fabrics cleared clandestinely. The appellant claimed exemption under Notification 4/97-C.E. for not taking credit on inputs used for manufacturing the goods. The adjudicating authority held the appellants liable for duty based on the assumption of credit availed. However, the Tribunal found the adjudicator's approach illogical as the appellants did not manufacture the base fabrics but received them from suppliers for lamination. The Tribunal emphasized that mere statements cannot be used against the appellants, and without evidence of credit taken on the specific inputs, full exemption applied. The Tribunal set aside the duty demand, penalty, and confiscation order.

Issue 2: Confiscation and redemption fine of seized goods
The seized HDPE woven fabrics were subject to confiscation and redemption fines. The Tribunal found that the appellants were eligible for full exemption under Notification 4/97-C.E. as they did not take credit on the inputs used for the seized goods. The Tribunal emphasized the lack of evidence supporting credit availed, leading to the conclusion that the goods were indeed eligible for exemption. Consequently, the order for confiscation and penalties was deemed unsustainable and set aside.

Issue 3: Penalty imposition on company director and supervisor
Penalties were imposed on the company director, supervisor, and the appellants. The Tribunal noted the absence of positive evidence indicating credit taken on inputs for the seized goods. It emphasized that maintaining separate accounts was not necessary if reflected in returns and registers. The Tribunal held that the penalties imposed were not justified due to the lack of evidence supporting the alleged credit availed. Therefore, the penalties on the company director, supervisor, and the appellants were set aside.

Issue 4: Non-accountal of finished goods in RG1 register
The issue of non-accountal of finished goods in the RG1 register was raised. The Tribunal differentiated between non-accountal and a failure to make an entry, highlighting that the goods were accounted for in private records and the RG1 register for captive consumption. The failure to enter the finished goods manufactured from the captively consumed stock was deemed a mere failure to make an entry, not non-accountal. Consequently, the Tribunal held that there was no basis for confiscation or penalty imposition due to the failure to make an entry. The orders passed by the lower authorities were set aside, and all appeals were allowed.