2007 (3) TMI 423 - AT - Central Excise

Summary

Issues involved: Duty demand on processed MMF, duty demand on Folding Contractor, penalty under Rule 173Q, penalty under Rule 209A, confirmation of orders by Commissioner (A).

Duty demand on processed MMF:
The appellant, a company and assessee under the C.Ex Act, faced duty demand on processed MMF and Folding Contractor. The officers found shortages and alleged unpaid duty. The show cause notice proposed penalty under Section 11AC and recovery of duty. The lower authority confirmed duty demand and imposed penalties. The Tribunal remitted the matter for denovo decision, which was confirmed by the Commissioner (A) except for interest under Section 11AB. The Tribunal found that clandestine removal of goods cannot be proven solely based on recovered chits, as corroborative evidence was lacking. The demand based on assumptions and presumptions was not upheld.

Duty demand on Folding Contractor:
The officers found paper chits at the Folding Contractor's premises, alleging unpaid duty. However, the Tribunal found that there was no concrete evidence linking the chits to the appellant's factory. The demand of Rs. 99564 based on these chits was considered only on assumption and presumption, and thus not upheld.

Penalty under Rule 173Q:
The penalty under Rule 173Q(1) was imposed by the lower authority, which was confirmed by the Commissioner (A). However, the Tribunal reduced the penalty from Rs. 1 lakh to Rs. 5000, considering the lack of corroborative evidence and the duty demand being upheld only on shortages found in the factory. The penalty was reduced to meet the requirements of law based on the conduct of the appellants.

Penalty under Rule 209A:
The penalty of Rs. 40,000 under Rule 209A imposed on the second appellant was set aside by the Tribunal. It was noted that there was no evidence to conclude that the second appellant knowingly dealt with goods liable for confiscation under Central Excise Law.

Confirmation of orders by Commissioner (A):
The appeal of the first appellant was partly allowed by upholding the demand of Rs. 53,389 and imposing a penalty of Rs. 5000 under Rule 173Q(1). The appeal of the second appellant was allowed, and the penalty was set aside. The Tribunal's decision was pronounced on 1-3-2007.