2009 (3) TMI 768 - AT - Central Excise

Summary

Issues: Violation of Compounding Levy Scheme, Manufacturing activity in violation of order, Operation for more than two shifts, Clandestine removal of goods, Adjudication against the respondent, Operation within the purview of the compounding order, Benefit of doubt to the respondent, Director's statement about machine operation during night shift, Appeal hearing outcome

In this case, the issue at hand was the alleged violation of the Compounding Levy Scheme by the respondent. The learned DR argued that the respondent operated for more than two shifts and on more machines than allowed under the scheme. The documents recovered from the factory premises supported the claim that manufacturing activity took place in violation of the scheme. The Adjudicating authority levied duty based on this violation, while the Appellate Authority granted relief to the appellant based on a statement by the Director of the respondent firm admitting machine operation during night shifts by laborers and employees.

On the other hand, the Respondent's counsel argued that the evidence, including a notebook recovered during the investigation, did not conclusively prove the allegations. It was contended that there was no clandestine removal of goods and no concrete evidence of a third shift running after 2 AM. The respondent maintained that they operated within the two-shift limit as per the compounding order. The Appellate Authority had already passed a reasoned order in favor of the respondent, which, according to the counsel, did not warrant any interference.

Upon hearing both sides and examining the record, the Tribunal noted that the compounding levy scheme allowed the respondent to operate seven embroidery machines in two shifts, from 8 AM to 5 PM and from 5 PM to 2 AM. The adjudicating authority failed to establish that the machines were used for manufacturing beyond the permitted shifts. Despite the Revenue's efforts to show goods beyond the installed capacity, there was no concrete evidence of machine operation beyond two shifts. The Tribunal emphasized that the compounding levy scheme was based on a shift-wise assessment, and without clear proof of violations, the respondent was given the benefit of the doubt. The Director's statement about laborers and employees operating machines during night shifts was not substantiated by evidence of operation beyond 2 AM.

Ultimately, the Tribunal upheld the order passed by the Commissioner (Appeals), dismissing the Revenue's appeal. The decision was based on the lack of cogent reasons to disturb the previous ruling and the absence of concrete evidence supporting the charges against the respondent. The plea of the Revenue failed to find favor during the appeal hearing, leading to the dismissal of the appeal.