2012 (7) TMI 711 - AT - Central Excise

100% EOU clandestine removal - assessee is alleged to have manufactured and cleared fabrics in DTA without payment of duty under the guise of sale of design software Held that - Purchaser on whose name the bills of design software were raised under their letters and statements have confirmed that they have not purchased any design software from the assessee Company but they have purchased the articles of fabrics from the assessee - in the balance sheet of annual report, production of 1,16,010 Mtrs have been mentioned while in the central excise records it is recorded as 99,066 Mtrs only which shows that production in the excise records were suppressed with intention to evade payment of duty - appellants have clandestinely manufactured and cleared the goods under the guise of design software. Demand of duty - Job work alleged that assessee has sent the fabrics to the sub-contractor for job-work for getting processed the fabrics and the goods were never received back from the jobworkers Held that - Assessee has issued sale bills of fabrics for consideration of amount and they have booked these transactions in their annual books of accounts - goods were cleared and bills were raised for the fabrics for consideration and it was nothing but sale and, therefore, duty is required to be paid by the appellants on such sales Limitation - Held that - Appellants have not given the correct figure of production of goods in the central excise records as figures shown in balance sheets are different, therefore, extended period of limitation has rightly been invoked by the department . Duty - duty demanded under the show-cause notice dated 14.3.2002 has again been demanded in the present show-cause notice - at the rate prescribed under Notification No. 2/1995 which is applicable in respect of goods manufactured out of imported raw material as well as indigenous raw material - contention of the appellants that they have never imported any yarn for the manufacture of fabrics in their factory - matter remanded back to the original authority for adjudication after verification of these facts

Summary

Issues:
1. Alleged evasion of central excise duty by manufacturing fabrics under the guise of design software sales.
2. Clandestine removal of fabrics without payment of duty in the year 2001-02.
3. Failure to bring back processed goods from sub-contractors within the stipulated time leading to duty evasion.

Analysis:

Issue 1:
The appellant was alleged to have evaded central excise duty by manufacturing and clearing fabrics under the guise of design software sales. The investigation revealed discrepancies between the annual balance sheet and central excise records. Customers confirmed purchasing fabrics instead of design software. The Tribunal found the appellant clandestinely manufactured and cleared goods without paying duty, agreeing with the Commissioner's findings.

Issue 2:
In the year 2001-02, the appellant was accused of clandestinely removing fabrics without paying duty, as the sale value in the annual report exceeded that in excise records. The Tribunal upheld the department's demand for duty on the differential value, considering the balance sheet figures as authentic and rejecting the appellant's challenge.

Issue 3:
The appellant sent fabrics to sub-contractors for processing but failed to receive the goods back within the stipulated time. Subsequently, the appellant raised sale bills for the fabrics in the name of job workers. The Tribunal noted that the goods were cleared and bills issued for fabrics, not semi-finished goods, requiring duty payment. The contention that the goods were sent under semi-finished conditions was deemed unacceptable.

The Tribunal rejected the appeals on all three issues, concluding that the appellant had clandestinely manufactured and cleared goods, evading duty. The extended period of limitation was deemed valid due to discrepancies in production figures. The matter of duty leviable on goods and the previous show-cause notice were remanded for further adjudication, directing verification of facts and re-examination of penalty imposition.

The appeals were disposed of through remand, with the Tribunal providing detailed reasoning for each issue and directing further proceedings on duty quantification and penalty imposition.