2007 (5) TMI 607 - AT - Central Excise

Summary

Issues Involved:
1. Duty Demand and Penalty under Central Excise Act, 1944
2. Time Barred Proceedings
3. Clandestine Manufacture and Removal of Goods
4. Process Loss and Production Figures
5. Discrepancy in Sales Figures
6. Penalty and Interest

Summary:

1. Duty Demand and Penalty under Central Excise Act, 1944:
The appellant challenged the adjudication order dated 24/03/2003, which levied a duty demand of Rs. 17,80,911/- u/s 11A of the Central Excise Act, 1944, with an equivalent penalty u/s 11AC and interest u/s 11AB. The demand was based on allegations of clandestine manufacture and removal of excisable goods (spring leaves) without payment of duty.

2. Time Barred Proceedings:
The appellant argued that the proceedings were time-barred and that the adjudicating authority arbitrarily determined the assessable quantity of excisable goods and their value. The appellant contended that normal process losses were not given due weightage, and there was no malafide intent to evade duty.

3. Clandestine Manufacture and Removal of Goods:
The Department's investigation revealed discrepancies in the appellant's records, indicating that 807.264 MT of finished goods were unaccounted for and clandestinely removed. The adjudicating authority found that the appellant failed to provide supporting evidence to counter the allegations, leading to the conclusion that the appellant suppressed production and removed goods without payment of duty.

4. Process Loss and Production Figures:
The appellant claimed that normal process losses occurred during manufacturing, but the adjudicating authority found these claims unsubstantiated. The authority noted that the appellant did not maintain proper records to prove stock positions and failed to demonstrate the stages of loss during production.

5. Discrepancy in Sales Figures:
The investigation found discrepancies between the sales figures submitted to the Excise, Income Tax, and Sales Tax authorities. The appellant's explanation for these discrepancies was deemed unsatisfactory. The adjudicating authority concluded that the appellant suppressed sales figures and actual manufactured goods, leading to the evasion of duty.

6. Penalty and Interest:
The adjudicating authority imposed an equal amount of penalty as the duty demand. However, the tribunal found that a penalty of Rs. 5.00 Lakhs would meet the ends of justice, while interest would be realizable according to law. The appellant's appeal was partly allowed to this extent, and the cross-objection by the revenue was dismissed.

Conclusion:
The tribunal upheld the adjudication order's findings on duty demand and clandestine removal of goods but reduced the penalty amount. The proceedings were deemed within the extended period and not time-barred. The appellant's claims of process loss and discrepancies in sales figures were rejected due to lack of evidence.