2008 (12) TMI 585 - AT - Central Excise

Clandestine removal - Evidence - Held that - Every case of clandestine removal is required to be looked into and examined on the basis of a evidence available in that particular case. In the present case it is not only the difference between the two records which is the basis for the confirmation but extensive investigations stand carried out by the Revenue which only pointed out to the fact of clandestine removal by the appellants

Issues Involved:
1. Duty demand based on the difference between monthly production reports (private documents) and ER-1 returns.
2. Reliance on oral statements and private records without corroborative evidence.
3. Inflated and arbitrary value adopted for calculating the demand of duty.
4. Duty demand based on the shortage of raw material and alleged clandestine clearance.
5. Absence of evidence for raw material purchase in high volumes.
6. Calculation of demand treating the amount received as "cum-duty" price.
7. Duplication of evidence in corroborative documents.
8. Maximum demand confirmation based on available evidence.
9. Payment to labor contractor and possible inflation of production details.
10. Incorrect value adopted based on printed price rather than actual transaction value.
11. Duplication of demand in respect of M/s. Motorol Speciality Oil Ltd.
12. Need for remand for verification of issues.
13. Partial payment of duty during inquiry.
14. Leniency in penalties and personal penalties on employees/directors.

Issue-wise Detailed Analysis:

1. Duty Demand Based on Monthly Production Reports and ER-1 Returns:
The demand of Rs. 1,41,13,859/- was confirmed based on the discrepancy between the Monthly Production Report (private document) and ER-1 returns. The Tribunal noted that such charges need to be corroborated with evidence like procurement of raw materials, electricity usage, and transportation proof. However, in this case, extensive investigations and admissions by company representatives confirmed clandestine removals.

2. Reliance on Oral Statements and Private Records:
The appellants argued that the demand was based solely on oral statements and private records without corroborative evidence. The Tribunal found that the statements of company representatives and seized documents, including private diaries, provided sufficient evidence of clandestine removals.

3. Inflated and Arbitrary Value Adopted for Duty Calculation:
The appellants contended that the value used for calculating the duty demand was highly inflated and arbitrary. The Tribunal did not specifically address this issue in detail but implied that the values used were supported by the evidence on record.

4. Duty Demand Based on Shortage of Raw Material and Alleged Clandestine Clearance:
The demand of Rs. 1,91,347/- was based on the shortage of raw materials, and Rs. 1,85,060/- was based on alleged clandestine clearance. The Tribunal found that the evidence, including statements and private records, supported the charges of clandestine removal.

5. Absence of Evidence for Raw Material Purchase in High Volumes:
The appellants argued that there was no evidence of raw material purchase in high volumes to justify the duty demand. The Tribunal held that in cases of clandestine removal, it is not always necessary to establish raw material procurement and electricity consumption if other corroborative evidence is strong.

6. Calculation of Demand Treating Amount Received as "Cum-duty" Price:
The appellants contended that the demand should be calculated by treating the amount received as "cum-duty" price. The Tribunal agreed and remanded the matter to the Commissioner for re-quantification of the demand in light of the law declared by the Larger Bench of the Tribunal and the Supreme Court.

7. Duplication of Evidence in Corroborative Documents:
The appellants claimed that the corroborative evidence in the form of invoices and private diary details were duplicative. The Tribunal did not find this argument persuasive and held that the evidence was sufficient to support the charges.

8. Maximum Demand Confirmation Based on Available Evidence:
The appellants argued that the maximum demand should be based on available evidence, which would be around Rs. 25-30 lakhs. The Tribunal agreed to remand the matter for re-quantification of the demand.

9. Payment to Labor Contractor and Possible Inflation of Production Details:
The appellants suggested that the labor contractor might have inflated production details for higher labor charges. The Tribunal found that the records maintained by the labor contractor corroborated the clandestine removals and dismissed this argument.

10. Incorrect Value Adopted Based on Printed Price:
The appellants argued that the value adopted based on the printed price was incorrect. The Tribunal did not specifically address this issue but implied that the values used were supported by the evidence on record.

11. Duplication of Demand in Respect of M/s. Motorol Speciality Oil Ltd.:
The appellants argued that the demand was duplicated in respect of M/s. Motorol Speciality Oil Ltd. The Tribunal agreed to remand the matter for verification of any duplication of demand.

12. Need for Remand for Verification of Issues:
The Tribunal remanded the matter to the Commissioner for re-quantification of the duty demand, verification of duplication of demand, and consideration of the cum-duty price.

13. Partial Payment of Duty During Inquiry:
The appellants had already paid Rs. 13.50 lakhs during the inquiry. The Tribunal did not specifically address this payment but implied that it would be considered during re-quantification.

14. Leniency in Penalties and Personal Penalties on Employees/Directors:
The appellants requested leniency in penalties and argued that personal penalties on employees/directors were unwarranted. The Tribunal remanded the matter for fresh adjudication of penal liabilities based on the re-quantified duty demand.

Conclusion:
The Tribunal upheld the findings of clandestine removal against M/s. Motorol Technologies Ltd. but remanded the matter to the Commissioner for re-quantification of the duty demand, verification of duplication of demand, and fresh adjudication of penal liabilities. The appeals were allowed in these terms.

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