2005 (12) TMI 444 - AT - Central Excise

Issues Involved:

1. Confirmation of Demand of Rs. 34,47,007/-
2. Confirmation of Demand of Rs. 1,62,05,830/-
3. Confiscation and Fine for 1,61,741 Lmtr of Processed Fabrics
4. Confiscation and Fine for 1151.40 Lmtr of Processed Fabrics
5. Confiscation and Fine for Excess Quantities of Processed MMF, Work-in-Process Material, and Grey Cloth
6. Confiscation and Fine for 57,723 Lmtr of Processed Fabrics
7. Confiscation and Fine for 19,304 Lmtr of Processed Fabrics
8. Imposition of Penalty of Rs. 1 Crore on M/s. Venkateswara Silk Mills
9. Imposition of Personal Penalties on Various Individuals

Detailed Analysis:

1. Confirmation of Demand of Rs. 34,47,007/-

The Commissioner's findings in Para 155 noted that the duty was demanded based on the possible production of processed fabrics from unaccounted grey fabrics. However, the evidence was insufficient as it relied on a single document (GS/55/70) which was not corroborated by other evidence such as receipt of raw materials, excess electricity consumption, or unaccounted sales. The Tribunal found no concrete evidence supporting the clandestine clearance and thus set aside the demand.

2. Confirmation of Demand of Rs. 1,62,05,830/-

The demand was based on the alleged manufacture and clearance of 97,09,904 Lmtrs of processed fabrics. The Tribunal noted that the main evidence (GS/55) was not signed or corroborated. The appellants demonstrated that their production capacity, as determined by the Department, was insufficient to manufacture the alleged quantity. The Tribunal found the evidence lacking and set aside the demand.

3. Confiscation and Fine for 1,61,741 Lmtr of Processed Fabrics

The appellants conceded a duty liability of Rs. 2.10 lakhs. The Tribunal found the redemption fine of Rs. 5 lakhs to be excessive and reduced it to Rs. 1 lakh.

4. Confiscation and Fine for 1151.40 Lmtr of Processed Fabrics

The duty liability was Rs. 1016/-. The Tribunal reduced the redemption fine from Rs. 2,500/- to Rs. 1,000/-.

5. Confiscation and Fine for Excess Quantities of Processed MMF, Work-in-Process Material, and Grey Cloth

The Tribunal found that the goods were still lying in the factory and had not been removed. Therefore, the confiscation and fine of Rs. 1 lakh were set aside.

6. Confiscation and Fine for 57,723 Lmtr of Processed Fabrics

The duty liability was Rs. 78,730/-. The Tribunal found the fine of Rs. 2 lakhs excessive and reduced it to Rs. 5,000/-.

7. Confiscation and Fine for 19,304 Lmtr of Processed Fabrics

The duty liability was Rs. 26,253/-. The Tribunal reduced the fine from Rs. 65,000/- to Rs. 25,000/-.

8. Imposition of Penalty of Rs. 1 Crore on M/s. Venkateswara Silk Mills

Given that major demands were set aside, the Tribunal found the penalty of Rs. 1 crore unjustified. The total uncontested duty was Rs. 3,16,337/-, so the penalty was reduced to Rs. 30,000/-.

9. Imposition of Personal Penalties on Various Individuals

The Commissioner did not provide specific findings justifying the personal penalties under Rule 209A. Therefore, the Tribunal set aside these penalties.

Conclusion:

The Tribunal modified the impugned order significantly, setting aside major demands and reducing fines and penalties based on the lack of concrete evidence and the appellants' demonstrated production capacity. The final order was pronounced in open court on 20-12-2005.

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