2012 (4) TMI 557 - AT - Central Excise

Clandestine removal - penalties for non-accountal of finished goods in RG-1 register and for non-accountal of billets in RG-1 register - The allegations of clandestine removal are primarily based upon the documents recovered from the residential premises of Shri Bansal showing purchase of furnace oil and small quantity of aluminum scrap. In addition, the Revenue has also relied upon the documents recovered from the transporter s premises showing booking of various trucks in the name of M/s. Aum. Whether in the peculiar facts of the case, there was sufficient cogent, unimpeachable, relevant and credible material evidence so as to establish the case against the appellant company applying the test of preponderance of probability? Held that - In the entire records of proceedings, there is no evidence to indicate that there was clandestine manufacturing. There is no independent tangible evidence on record of any clandestine purchases or receipt of the raw materials required for the manufacturing of the alleged quantity of finished goods for its clandestine removal from the factory. In the entire notice and the order there is no satisfactory and reliable independent evidence as regards the unaccounted manufacture and or receipt of the huge quantities of raw materials. There is also no cogent evidence about any freight payment for any such movement. The demand confirmed against M/s. Aum Aluminum P. Ltd. on the charges of clandestine removal is set aside along with setting aside the penalty of equivalent amount imposed upon them u/s 11AC of the Act. Penalties imposed upon Shri G.G. Bansal, Shri V.N. Agarwal and M/s. Vinviv Holding & Trading Co. P. Ltd. are also set aside. The confiscation of the section seized from factory of M/s. Aum Aluminum P. Ltd. for their non-accountable is upheld, however, redemption fine is reduced from ₹ 8 lakhs to ₹ 75,000/- and penalties imposed on M/s. Aum Aluminum P. Ltd. on this account is reduced from ₹ 1 lakh to ₹ 50,000/- Appeal disposed off - decided partly in favor of appellants.

Issues Involved:
1. Allegation of clandestine removal of aluminum sections.
2. Unaccounted procurement of furnace oil and aluminum scrap.
3. Reliability of transporters' records.
4. Production capacity and job work.
5. Confiscation of goods and imposition of penalties.

Detailed Analysis:

1. Allegation of Clandestine Removal of Aluminum Sections:
The Revenue alleged that M/s. Aum Aluminum Pvt. Ltd. clandestinely removed aluminum sections without payment of duty. The case was based on documents recovered from transporters, showing truck bookings in the name of M/s. Aum. The Tribunal found that the transporters' records alone could not conclusively establish clandestine removal, especially when the transporters testified that all goods transported were covered by valid invoices. The Tribunal emphasized that allegations of clandestine removal must be supported by concrete evidence, including proof of unaccounted raw materials, increased power consumption, and actual receipt of goods by buyers, which were absent in this case.

2. Unaccounted Procurement of Furnace Oil and Aluminum Scrap:
The Revenue's case included the unaccounted procurement of furnace oil and aluminum scrap, suggesting these were used in manufacturing unaccounted aluminum sections. The Tribunal noted that the furnace oil was purchased in the name of M/s. Aum but was allegedly traded by Shri G.G. Bansal without the company's knowledge. The adjudicating authority failed to verify the payments for the furnace oil as directed by the Tribunal. The Tribunal found the explanation of private trading by Shri Bansal plausible, especially in the absence of evidence linking the unaccounted furnace oil to the manufacturing of aluminum sections.

3. Reliability of Transporters' Records:
The Tribunal scrutinized the transporters' records, which the Revenue relied upon to prove clandestine removal. It was found that the booking registers and memos did not conclusively establish actual transportation of goods. The transporters confirmed that all goods transported were covered by valid invoices, and there was no evidence of duplicate or parallel invoices. The Tribunal held that third-party records could not be presumed accurate without corroborative evidence, and the transporters' records alone were insufficient to prove clandestine removal.

4. Production Capacity and Job Work:
The Tribunal examined the production capacity of M/s. Aum's plant, which was certified by chartered engineers as 400-432 MT per annum. The adjudicating authority's assumption that the company could produce 1000 MT annually, including job work, was not supported by evidence. The Tribunal noted that job workers, if any, were not identified, and no evidence of raw material movement to job workers was provided. The Tribunal held that the liability for duty would fall on the job worker, not M/s. Aum, in the absence of evidence showing the company's involvement in job work.

5. Confiscation of Goods and Imposition of Penalties:
The Tribunal upheld the confiscation of aluminum sections found unaccounted in the factory but reduced the redemption fine from Rs. 8 lakhs to Rs. 75,000 and the penalty from Rs. 1 lakh to Rs. 50,000. The penalties imposed on individuals for non-entry of goods in RG-1 register were set aside. The Tribunal found that the non-entry was a procedural lapse without intent to evade duty.

Conclusion:
The Tribunal set aside the demand of duty and penalties imposed on M/s. Aum Aluminum Pvt. Ltd. and other appellants for alleged clandestine removal, finding insufficient evidence to support the allegations. The confiscation of unaccounted goods was upheld with reduced fines and penalties, emphasizing the need for concrete evidence in cases of clandestine removal.

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