2004 (10) TMI 420 - AT - Central Excise

Summary

Issues:
1. Dispensing with the condition of pre-deposit of duty and penalty.
2. Confirmation of demand on clandestine removal of perfumery compound.
3. Confirmation of demand on under-valuation of perfumery compound.

Analysis:

Issue 1: Dispensing with the condition of pre-deposit of duty and penalty
The appellant sought the dispensation of the pre-deposit condition of duty amounting to Rs. 79,79,899/- along with an equivalent personal penalty. The senior advocate argued that the demand was based on invoices and bills issued by the appellant, and the allegation of clandestine removal lacked merit. However, the respondent contended that there was evidence of record manipulation by the appellant, including discrepancies in physical stock and production records. The tribunal, after considering both sides, directed the appellant to deposit Rs. 7.00 lakhs within six weeks, with the condition of pre-deposit for the remaining amount of duty and penalty being dispensed with.

Issue 2: Confirmation of demand on clandestine removal of perfumery compound
An amount of Rs. 20.00 lakhs was confirmed against the appellant for alleged clandestine removal of perfumery compound to a specific buyer. The appellant argued that the demand was solely based on invoices issued by them, and the buyer's failure to record the receipt did not indicate clandestine removal. The tribunal agreed with the appellant, stating that the demand solely based on appellant's bills did not prove clandestine removal, thus ruling in favor of the appellant on this issue.

Issue 3: Confirmation of demand on under-valuation of perfumery compound
A further amount of Rs. 59,79,899/- was confirmed based on the appellant clearing first-grade perfumery compound as second-grade through undervaluation. The appellant defended by stating that their RG 1 Register showed clearances of two different grades, indicating they manufactured both grades. However, the tribunal found evidence of record manipulation and discrepancies, leading to a lack of prima facie case in favor of the appellant. Consequently, the tribunal directed the appellant to deposit a specified amount within a set timeframe, with the condition of pre-deposit for the remaining amount being dispensed with.

In conclusion, the tribunal ruled in favor of the appellant on the issue of clandestine removal but found against them on the under-valuation matter, directing a partial deposit and dispensing with the pre-deposit condition for the remaining amount of duty and penalty. The compliance was set for a future date to ensure fulfillment of the directed deposit.