2007 (5) TMI 413 - AT - Central Excise

Confiscation and penalty - Clandestine removal - Evidence - Burden of Proof - Notification No. 3/2001-C.E.

Summary

Issues: Department's appeal against Commissioner (Appeals) order

In this case, the Department appealed against the order of the Commissioner (Appeals) regarding the confiscation of texturised yarn, duty demand, penalty, and redemption fine imposed on the respondent company.

Analysis:

The respondent was found to have cleared texturised yarn without reflecting the clearances in Central Excise records. The original authority confirmed duty demand, imposed a penalty, and redemption fine. The Commissioner (Appeals) upheld the confiscation but reduced the duty demand after considering a notification. The Department appealed against this order.

Upon review, the Tribunal noted that the concessional duty rate was subject to the use of duty-paid yarn in manufacturing texturised yarn. The officers treated the removal as clandestine but acknowledged that the raw material had discharged duty. The evidence indicated that the yarn was procured from the market, presumed to be duty paid unless proven otherwise. The burden of proving non-duty paid yarn lay with the Department, which failed to provide any evidence. The quantified duty evasion at seizure was Rs. 8600.14. The Commissioner (Appeals) decision to reduce the duty demand was deemed reasonable and legally sustainable.

Regarding the redemption fine and penalty, they were linked to the extent of evasion. Since the duty evasion was determined to be Rs. 8600.14, the reduction in the redemption fine and penalty imposed on the appellant was considered justified. Therefore, the Tribunal upheld the Commissioner (Appeals) decision and dismissed the Department's appeal.

In conclusion, the Tribunal found the reduction in duty demand, redemption fine, and penalty to be appropriate based on the evidence and legal principles. The appeal by the Department was dismissed, affirming the decision of the Commissioner (Appeals).