2008 (5) TMI 479 - AT - Central Excise

Summary

Issues involved: Detection of shortages in finished goods and scrap, clandestine removal of goods without payment of duty, confirmation of duty based on octroi receipts, imposition of penalties.

Shortages in finished goods and scrap: The central excise officers detected a shortage of 816.865 MTs of finished goods and 61.792 MTs of scrap during checks conducted at the appellant's factory. The appellant contested the accuracy of the shortages, stating that only bundled and packed finished material was considered, while other finished and semi-finished goods were not taken into account. Statements from the appellant's Excise Clerk and Executive Director admitted to the shortages, with discrepancies in weight attributed to another individual responsible for maintaining records.

Clandestine removal of goods: Further investigations revealed that the appellant had sold goods worth Rs. 29.75 lakhs without payment of central excise duty or proper invoices. The appellant was found to have manufactured MS Bars from raw material without paying duty, as confirmed by the Executive Director's statement acknowledging the clandestine removal and clearance of goods.

Confirmation of duty based on octroi receipts: The Revenue conducted inquiries with Anand Nagar Palika regarding raw material brought to the factory, which showed that the appellant had paid octroi on material not recorded in their statutory records. This led to the conclusion that MS Bars were manufactured and cleared without duty payment. The Commissioner issued a show cause notice demanding duty amounts based on these findings.

Imposition of penalties: The Commissioner, after adjudication, confirmed the duty demands and imposed penalties under Section 11AC of the Central Excise Act, 1944. A personal penalty of Rs. 10 lakhs was specifically imposed on the Executive Director of the company in addition to the duty amounts.

Judgment: The Appellate Tribunal found that the appellant's explanations regarding shortages were not adequately considered, especially regarding the weight discrepancies in finished goods. The Tribunal directed the Commissioner to re-consider the issue after providing the appellant with the seized diary for their defense. The Tribunal emphasized the appellant's right to request seized documents for their defense. The Tribunal also instructed the Commissioner to re-examine the demand related to goods sold without duty payment, considering the remand of the other appeals. The appeals were disposed of accordingly, allowing the appellant to present their defense on the demands.