2010 (2) TMI 1044 - AT - Central Excise

Clandestine manufacture and removal - suppression of production - preponderance of the probability - Held that - there was seizure of clandestinely removed goods in the transit and there was unaccounted stock of about ₹ 5 lakhs in the factory premises and that there were slips Sr. No. 43 to 50 all dated 30-6-2000 indicating clandestine clearance of goods valued at ₹ 1,40,575/-. In these circumstances, there can be no doubt about the fact of clandestine removal indulged in by the respondent firm. In the present case, undisputedly the person in charge of the conveyance was the driver and he was in the knowledge of transporting of the offending goods. Under these circumstances, the confiscation of vehicle requires to be upheld - the option of redemption of the vehicle should have been given to the owner of the vehicle. The issue relating to the re-determination of the duty liability taking into account the effect of the Notification No. 47/2000 dated 1-9-2000 has not been considered by the original authority. Appeal allowed - decided partly in favor of appellant.

Issues Involved:
1. Suppression of production and clandestine removal.
2. Confiscation of goods and vehicle.
3. Validity of retracted statements.
4. Determination of duty liability and penalties.
5. Application of exemption notification.

Issue-wise Detailed Analysis:

1. Suppression of Production and Clandestine Removal:
The Central Excise officers intercepted a tempo carrying biscuits from M/s. Champion Confectionery, accompanied by documents from M/s. Globe Food Products and M/s. Creative Marketing. The tempo driver admitted the goods were loaded from M/s. Champion Confectionery, leading to the seizure of goods valued at Rs. 1,80,898/- and the tempo valued at Rs. 1,50,000/-. Follow-up actions revealed unaccounted biscuits worth Rs. 4,94,785/- in the factory and statements from key personnel admitting to "nearly 50% of the clearances" being unaccounted. The original adjudicating authority confirmed the demand of duty of Rs. 10,15,035/- and imposed penalties.

2. Confiscation of Goods and Vehicle:
The original adjudicating authority confiscated the goods and the vehicle but allowed their redemption on payment of fines. The Commissioner (Appeals) modified this, setting aside the confiscation of unaccounted goods in the factory but upholding the confiscation of goods in transit and the vehicle. The Tribunal restored the confiscation of unaccounted goods in the factory, reducing the redemption fine to Rs. 50,000/-, and upheld the confiscation of the vehicle, allowing its redemption by the owner on payment of Rs. 30,000/-.

3. Validity of Retracted Statements:
The respondents retracted their statements through affidavits filed before the Special Metropolitan Magistrate. The Tribunal found these retractions unreliable as they were not promptly communicated to the officers who recorded the statements and surfaced only in the reply to the show-cause notice. The Tribunal emphasized that the retractions were not credible, given the substantial evidence of clandestine removal and the subsequent payment of Rs. 1 lakh towards duty.

4. Determination of Duty Liability and Penalties:
The Commissioner (Appeals) did not approve the demand of differential duty based on 50% unaccounted clearances, citing retracted statements. However, the Tribunal found the original authority's method of determining clearances based on the statements reasonable, given the corroborating evidence. The Tribunal directed the original authority to re-work the duty liability, interest, and penalties, considering the effect of Notification No. 47/2000 dated 1-9-2000.

5. Application of Exemption Notification:
The Tribunal acknowledged that the original adjudicating authority did not consider the effect of Notification No. 47/2000 dated 1-9-2000, which enhanced the exemption limit. The matter was remanded to the original authority to re-determine the duty liability, interest, and penalties accordingly.

Conclusion:
The Tribunal disposed of the appeals and cross-objection by partially allowing the Department's appeal, restoring the original authority's findings on unaccounted clearances and confiscation of goods, and remanding the matter for re-determination of duty liability considering the exemption notification. The vehicle owner was allowed to redeem the vehicle on payment of the specified fine.

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