2010 (5) TMI 444 - AT - Central Excise

Clandestine manufacture and removal - respondents have not maintained the statutory records namely, the daily production register and raw material register - maintained private records including the computerized form of records but were not maintaining the statutory records - No explanation is forthcoming for the said failure on the part of the respondents - shortage of stock of 15.928 MT of MS ingots even out of stock declared by them on 19-11-03 before the visiting officers - No explanation has been offered for such shortage either in reply to the notice - shortage of the finished goods on the date of visit by the officers and the private records, the order of the original authority in confirming the demand and imposition of penalty is justified - order of the Commissioner (Appeals) set aside

Summary

Issues:
- Appeal against the order of the Commissioner (Appeals) dated 31-1-07.
- Allegations of clandestine clearance of goods.
- Confirmation of duty and penalty.
- Reliability of private records and statements.
- Failure to maintain statutory records.
- Shortage of stock and discrepancies in records.

Analysis:

The case involved an appeal by the department against the order of the Commissioner (Appeals) dated 31-1-07. The officers found discrepancies during a visit to the factory premises of the respondent, including a shortage of finished goods and issues with maintaining statutory records. The department alleged clandestine clearance of goods and imposed duty and penalties. The original authority confirmed the duty demand and penalties, which was partially set aside by the Commissioner (Appeals).

The department argued that the discrepancies in records and clearances supported the confirmation of duty and penalties. They relied on the Tribunal's decision in a similar case to support their position. On the other hand, the respondent's advocate contested the reliability of certain records and statements, pointing out gaps in the investigation process, lack of corroboration, and failure to cross-examine key individuals.

After considering both sides' arguments and reviewing the records, the Member (T) noted the respondent's failure to maintain statutory records and discrepancies in the issuance of raw materials and production. The Member found the private records, including those maintained by the security in-charge, to be reliable despite objections raised by the respondent. The shortage of stock and other discrepancies supported the original authority's decision to confirm the duty demand and penalties.

Ultimately, the Member set aside the Commissioner (Appeals)'s order and restored the original authority's decision. The appeal was allowed in favor of the department based on the findings of discrepancies and the reliability of the private records in confirming the duty demand and penalties.

This detailed analysis highlights the issues of maintaining statutory records, reliability of private records, discrepancies in clearances, and the justification for confirming duty demand and penalties in the case.