2009 (12) TMI 803 - AT - Central Excise

Summary

Issues:
1. Appeal against Commissioner's order dated 21-7-2005 passed in remand of Tribunal's order.
2. Discrepancies in production and clearance records of bulk drugs manufacturer.
3. Consideration of records maintained under Drug Control Act.
4. Cross examination of panch witnesses.
5. Imposition of demand and penalty under Central Excise Rules.

Analysis:
1. The appeal was against the Commissioner's order dated 21-7-2005, passed in remand of the Tribunal's order dated 22-8-94. The appellant, a bulk drugs manufacturer, faced discrepancies in production and clearance records. The officers found shortages and discrepancies during a factory visit, leading to a show cause notice and subsequent adjudication. The Commissioner confirmed a demand of Rs. 4,86,569/- under Rule 9(2) of the Central Excise Rules, 1944, and imposed a penalty of Rs. 1,00,000/- under Rule 173Q of the same rules.

2. The appellant argued that as a bulk drugs manufacturer under stringent control of Drug Control Authorities, they maintained accounts under the Drug Control Act, which tallied with excise records. However, discrepancies arose due to job work activities with a sister concern and the absence of the Director. The private records indicated excess production not accounted for in excise records, which the appellant failed to explain satisfactorily.

3. The Respondent contended that the private records showed production exceeding excise records, obliging the appellant to explain these entries. Despite the alignment of excise and Drug Control Act records, the appellant's failure to account for excess production raised suspicions of manipulation.

4. The Tribunal noted the matter's history and the appellant's request for cross examination of panch witnesses. However, the Commissioner found no panchnama related to the case, rejecting the request. The Commissioner emphasized that matching records under the Drug Control Act did not absolve the appellant of explaining discrepancies in private records.

5. After considering submissions, the Tribunal upheld the Commissioner's demand of duty but reduced the penalty from Rs. 1,00,000/- to Rs. 50,000/- based on the circumstances. The liability for duty was affirmed due to the appellant's inability to explain excess production and clearances as per their records, despite the absence of direct evidence of clandestine removal.

In conclusion, the judgment upheld the demand of duty while reducing the penalty, emphasizing the importance of explaining discrepancies in production and clearance records and rejecting claims solely based on matching records from different regulatory acts.