2003 (7) TMI 644 - Commission - Central Excise

Summary

Issues Involved:
1. Clandestine manufacture and clearance of goods.
2. Duty liability and its quantification.
3. Confiscation of seized goods and cash.
4. Immunity from penalties, prosecution, and confiscation.

Detailed Analysis:

1. Clandestine Manufacture and Clearance of Goods:
The main applicant, ARP, admitted to clandestine manufacture and clearance of Latex Foam Products and other items from unaccounted raw materials. The SCN alleged that ARP did not properly account for their raw material purchases and used these unaccounted materials for production and clearance in a clandestine manner. The SCN proposed to demand duty, confiscate goods, and impose penalties based on these allegations.

2. Duty Liability and Its Quantification:
ARP initially admitted a duty liability of Rs. 45.97 lakhs, which was later increased to Rs. 56.69 lakhs. The SCN proposed a duty demand of Rs. 88,09,850/-. ARP contested the duty liability on two grounds:
- The SCN deemed the entire clandestine manufacture and clearance to be of prime products, ignoring the occurrence of defective goods.
- The value adopted in the SCN should be deemed as cum-duty value, and the correct assessable value should be worked back after extending abatement.

The Bench considered the plea regarding defective goods and accepted a margin of 6.87% for seconds/rejects based on evidence from the Rubber Board and subsequent records. The contention to deem the value adopted in the SCN as cum-duty value was withdrawn by ARP due to lack of documentary proof. The final duty liability was settled at Rs. 51,88,256/-.

3. Confiscation of Seized Goods and Cash:
The SCN proposed confiscation of goods seized from various premises and Rs. 8 lakhs seized from the residence of a partner of ARP. The Bench found no specific evidence to correlate the seized cash with clandestinely cleared non-duty paid goods and ruled that the confiscation of the cash was not legally tenable. The seized goods were ordered to be released.

4. Immunity from Penalties, Prosecution, and Confiscation:
The Bench granted immunity to ARP and the 12 co-applicants from penalties, prosecution, and confiscation under the Central Excise Act, 1944, and the Rules made thereunder. The immunities were granted based on ARP's full cooperation and true disclosure of duty liability. The Bench also ordered the release of Rs. 8 lakhs seized in cash.

Conclusion:
The applications were settled with the following terms:
- Duty liability of Rs. 51,88,256/- was settled and adjusted against Rs. 56.69 lakhs already paid.
- Immunity from penalty, prosecution, confiscation, and redemption fine was granted.
- Simple interest @ 10% p.a. on the settled duty amount was to be paid by ARP.
- Release of seized goods and cash was ordered.
- The immunities granted would stand withdrawn if any fraudulent means were employed or material facts were withheld.