2008 (11) TMI 490 - AT - Central Excise

Demand - Clandestine removal - Held that - It is not as if excess quantity was detected only in some of the bags so as to ensure that the consumers receive the entire quantity of 50 kg. of cement, and to offset any loss in loading and unloading of the cement bags but the case of 1 kg. cement packed in every single bag of cement bag was in excess - the charge of clandestine clearance stands established - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Clandestine clearance of cement without payment of duty.
2. Confiscation of seized cement bags.
3. Duty demand on clandestinely cleared cement.
4. Penalties imposed on the company and its Managing Director.

Analysis:

1. The case involved the detection of 1 kg. excess cement in each bag during a physical verification at the factory of the respondent, a cement manufacturer. The Manager and Managing Director admitted to the excess clearance without payment of Central Excise duty. The Commissioner (Appeals) upheld the confiscation of the excess cement bags but set aside the duty demand and penalties due to lack of evidence on clandestine clearance. The Tribunal found the theory of excess cement established through physical weighment and admissions, rejecting the Commissioner's reliance on a previous case due to the difference in duty basis. The Tribunal concluded that the charge of clandestine clearance was proven, upholding the duty demand and penalties imposed.

2. The duty leviable on cement was specific, and any excess quantity removed required the payment of additional duty. The Tribunal noted that the excess cement in each bag was not to ensure consumers received the full quantity but was a consistent 1 kg. excess in every bag. This led to the confirmation of clandestine clearance and the upholding of duty demand and penalties on the unit and its Managing Director. The Tribunal set aside the previous order that had annulled duty demand and penalties, allowing the appeals by the Revenue against the respondent company and its Managing Director.

This judgment highlights the importance of paying appropriate duties on goods removed and the consequences of clandestine clearance. The Tribunal's decision emphasizes the significance of evidence and consistency in duty assessment, ultimately leading to the reversal of the Commissioner (Appeals) ruling in this case.