2005 (10) TMI 405 - AT - Central Excise

Summary

Issues:
1. Discrepancy in stock of MCCP and CP
2. Demand of duty based on input-output ratio
3. Evidence of clandestine removal of goods
4. Validity of expert opinion on input-output ratio
5. Admissibility of Works Manager's statement

Analysis:
1. The case involved a discrepancy in the stock of Micro-Crystalline Cellulose Powder (MCCP) and Cellulose Powder (CP) found during a factory visit, leading to a demand for duty payment and confiscation of goods. The investigating officers suspected clandestine manufacturing and removal of 63.470 MTs of MCCP and 43.965 MTs of CP without duty payment. The Tribunal set aside the initial order and remanded the case for fresh adjudication.

2. The demand of duty was based on the input-output ratio calculated by the department using records seized from the factory and statements of the Works Manager and Managing Director. The input-output ratios for MCCP and CP were determined as 100:85 and 100:50 respectively. However, the Commissioner (Appeals) found no evidence of clandestine removal of goods and set aside the duty demand.

3. The Department appealed the decision, arguing that the Works Manager's admission of illicit removals of goods in a statement should be considered as evidence. The Works Manager's later affidavit and an expert's opinion were presented to challenge the duty demand. The Tribunal examined invoices to determine the net weight of wood pulp and accepted the expert's opinion that only 90-92% of wood pulp should be considered for the input-output ratio of MCCP production.

4. The Tribunal acknowledged the Works Manager and Managing Director's admission of clandestine removal but emphasized the importance of expert opinion in determining the input-output ratio. The Tribunal set aside both previous orders and remanded the case, directing a new input-output ratio calculation for MCCP production based on the expert's opinion and the net weight of wood pulp in the invoices.

5. The Tribunal concluded that neither the original authority's order nor the Commissioner (Appeals) decision could be upheld. The case was remanded to the original authority for a reevaluation based on the revised input-output ratio for MCCP production. The Tribunal allowed the appeal by way of remand, emphasizing the importance of a fair hearing for the assessee.

This detailed analysis highlights the key issues, arguments, and the Tribunal's decision in the legal judgment.