2007 (2) TMI 564 - AT - Central Excise

Summary

Issues:
1. Application for closure of stenter under Compounded Levy Scheme.
2. Allegations of using the stenter for manufacturing processed fabric during the sealed period.
3. Demand of duty and imposition of penalties by lower authorities.
4. Challenge against the order before the Appellate Tribunal.

Analysis:

1. The appellant, working under the Compounded Levy Scheme, applied for the closure of a stenter for a specific period. The stenter was sealed by the proper officer but was found open on a subsequent visit, leading to allegations of misuse for fabric manufacturing.

2. Proceedings were initiated based on the recovery of a private register showing production during the sealed period. The Director's statement confirmed the misuse, resulting in a demand for duty and personal penalties imposed on the appellant and the Director.

3. The lower authorities did not dispute the sealing of the stenter as per the appellant's application. Despite no challenge to the correctness of the sealing process, the authorities alleged misuse without evidence of connivance with the officers who sealed the stenter.

4. The Appellate Tribunal found the demand of duty lacked a legal basis due to the absence of evidence challenging the sealing process. The order confirming the duty demand was set aside, and the appeal was allowed in favor of the appellants, providing consequential relief.

This judgment highlights the importance of substantiating allegations with concrete evidence and ensuring legal procedures are followed to establish liability for duty demands and penalties. The Tribunal emphasized the need for authorities to prove misuse conclusively before imposing financial liabilities on the appellants.