2011 (1) TMI 758 - AT - Central Excise

Demand of duty on the basis of documents found in investigation. - Demand of duty on the warehoused goods - Held that - On account of clandestine removal of the goods without payment of Excise duty and the demand has been confirmed without re-quantification with corroborative documents and during the course of re-quantification, the authority has to correlate the documents. decided against Assessee. Regarding duty on warehoused goods. - held that - It is the duty of the department to prove that the transporter/warehouse owner had dealt with these goods knowing that the goods were non-duty paid. Department has failed to discharge this onus in this case. Mere allegation that the appellants had aided and abetted is not sufficient. decided in favour of Assessee.

Summary

Issues Involved:
1. Confirmation of demand, interest, and penalty against M/s Manmade Spinners (I) Ltd. (MMSL).
2. Penalties imposed on co-appellants under Section 209A of the Central Excise Rules, 1944.
3. Confiscation of goods and vehicle.
4. Allegations of clandestine removal of goods without payment of Central Excise duty.
5. Under-valuation of goods.
6. Role of M/s Nirmal Transport and M/s Nirmal Warehouse in aiding and abetting evasion of Central Excise duty.

Issue-wise Detailed Analysis:

1. Confirmation of Demand, Interest, and Penalty Against MMSL:
The main appellant, MMSL, was found to have cleared goods without proper Central Excise documentation and without accounting for them in their statutory records, resulting in a demand for Central Excise duty amounting to Rs. 79,12,258/-. The adjudicating authority confirmed a duty of Rs. 71,68,654/- along with interest and imposed an equivalent penalty under Section 11AC. The appellants contended that the demand was based on incorrect quantification and sought re-verification of documents.

2. Penalties Imposed on Co-appellants Under Section 209A:
Penalties were imposed on various family firms associated with MMSL, including Amit Weaving Mills, Ashish Textile Mills, and others, as well as on M/s Nirmal Transport and M/s Nirmal Warehouse. The appellants argued that these firms operated independently and that the penalties were unjustified. The Tribunal found that proper investigation and verification of purchases from the open market were not conducted, necessitating a remand for re-examination.

3. Confiscation of Goods and Vehicle:
The adjudicating authority confiscated goods valued at Rs. 7,06,860/- and a vehicle valued at Rs. 3,50,000/-, allowing redemption on payment of fines. The Tribunal upheld the confiscation but remanded the matter for re-quantification of the demand.

4. Allegations of Clandestine Removal of Goods:
The department alleged that MMSL cleared goods clandestinely without paying duty, supported by seized documents and statements. The appellants argued that the quantification of clandestine removal was incorrect and that proper verification was not conducted. The Tribunal found merit in the appellants' contention and remanded the matter for re-quantification and correlation of documents.

5. Under-valuation of Goods:
The department alleged under-valuation, stating that transportation and warehousing charges were not included in the assessable value. The appellants contended that they sold goods at a uniform price, including equalized freight. The Tribunal upheld the department's view, stating that transportation and warehousing charges were includable in the assessable value since the place of removal was the godown of M/s Nirmal Warehouse.

6. Role of M/s Nirmal Transport and M/s Nirmal Warehouse:
The Tribunal examined the involvement of M/s Nirmal Transport and M/s Nirmal Warehouse in aiding and abetting the evasion of duty. It was found that these entities acted on the instructions of MMSL and did not have knowledge of the evasion. The Tribunal relied on the case of Chawla Highway Carriers Vs. CCE, Mumbai-III, and concluded that penalties on these entities were not sustainable due to the lack of evidence showing their awareness of the evasion.

Final Judgment:
The Tribunal remanded the appeals filed by MMSL and the associated family firms for re-quantification of the demand after proper verification of documents. The demand on account of under-valuation was confirmed. The penalties imposed on M/s Nirmal Transport and M/s Nirmal Warehouse were set aside, and their appeals were allowed by way of remand for re-examination.