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2008 (5) TMI 485 - AT - Central ExciseDemand - Clandestine manufacture and removal - Evidence - Quantum of Penalty - consumption of Furnace oil - time limitation
Issues Involved:
1. Liability of duty amounting to Rs. 11,06,430/- 2. Demand raised in the corrigendum based on furnace oil consumption 3. Applicability of the extended period of limitation for the demand 4. Penalties imposed on ACCIPL and its officials Issue-wise Detailed Analysis: 1. Liability of duty amounting to Rs. 11,06,430/-: The appellants did not dispute the duty liability of Rs. 11,06,430/-. They had accepted this liability before the Settlement Commission and paid the amount. The tribunal upheld this demand based on evidence such as parallel invoices and statements of transporters. 2. Demand raised in the corrigendum based on furnace oil consumption: The corrigendum alleged that ACCIPL manufactured 22,640 MTs of CTD bars based on the consumption of 11,32,000 liters of furnace oil, while duty was paid only on 8021.050 MTs. The demand was calculated on the alleged suppressed production of 14618.950 MTs. The tribunal agreed with the appellant that no demand could be confirmed solely on the basis of furnace oil consumption, referencing the Tribunal's order in Nav Karnataka Steels Pvt. Ltd. v. CCE. The tribunal emphasized that clandestine production and removal cannot be established merely on theoretical grounds by employing a formula without sufficient corroborative evidence. The tribunal noted that the furnace was not operating under normal conditions due to substantial damage, which resulted in higher furnace oil consumption. The tribunal found that the department failed to rebut the evidence provided by ACCIPL regarding the damage and repair of the furnace. Consequently, the demand based on furnace oil consumption was set aside. 3. Applicability of the extended period of limitation for the demand: The tribunal held that the demand in the corrigendum was barred by limitation. ACCIPL filed monthly returns showing the quantity of furnace oil consumed, which was accepted by the department. Since the demand was based on statutory records, the extended period of limitation could not be invoked. The tribunal referenced several cases, including Bharat Heavy Electricals v. CCE and ITI Ltd. v. CCE, to support this conclusion. Therefore, the demand was unsustainable both on merits and on time-bar. 4. Penalties imposed on ACCIPL and its officials: Since ACCIPL had discharged the admitted duty liability of Rs. 11,06,430/- before the passing of the Commissioner's order, the tribunal reduced the penalty on ACCIPL to Rs. 3 lakhs, following the ratio of Nav Karnataka Steels Pvt. Ltd. decision. Penalties imposed under Rule 26 of the Central Excise Rules, 2002, on the Directors and employees of ACCIPL, M/s. ANSL, and its Director, and Shri Sanjay Mittal were set aside due to the absence of findings that any goods were liable to confiscation or actual confiscation, referencing the Tribunal's order in Castrol India Ltd. v. CCE, Vapi. Conclusion: The tribunal upheld the duty demand of Rs. 11,06,430/-, set aside the balance demand, reduced the penalty on ACCIPL to Rs. 3 lakhs, and set aside the penalties on the other appellants. The appeal by ACCIPL was partly allowed, while the appeals by other appellants were allowed in toto.
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