2012 (9) TMI 107 - AT - Central Excise

Clandestine removal of goods - demand of duty penalty Held that - Appellants have contended that they had maintained proper records and the goods were cleared under challans to their sister unit - job work challan and job work register etc. were seized by the preventive officers, they were prevented their relying upon the same - mere debit of duty at the time of visit of the officer by itself is no ground for holding against them - statements itself cannot prove the fact of clandestine removal - appellants are contending that job work records were maintained by them but as they were seized by the officers, they were not produced before the authorities below - fact of production and clearance of goods on job work basis can be substantiate from the parallel records maintained by their sister unit - matter remanded to the original adjudicating authority for de novo adjudication.

Summary

Issues:
1. Illicit clearance of final product and inputs detected during inspection.
2. Duty confirmation for various goods under Chapter 28 & 29 of the Central Excise Tariff Act, 1985.
3. Dispute over clearance of final product sodium hypochloride to sister unit without duty payment.

Analysis:

Issue 1: Illicit Clearance
The appellant, engaged in chemical manufacturing, faced proceedings due to illicit clearance of final products and inputs detected during an inspection by Central Excise Officers. The show cause notice led to an order by the original adjudicating authority, later confirmed by the Commissioner (Appeals).

Issue 2: Duty Confirmation
The advocate for the appellant accepted duty confirmation for some goods while disputing others. Notably, duty demands for certain inputs were dropped in favor of the appellant, while others were accepted along with penalties.

Issue 3: Clearance of Sodium Hypochloride
The main dispute centered around the clearance of sodium hypochloride to the appellant's sister unit without duty payment. The appellant claimed the goods were processed on a job work basis under Notification No. 214/86. However, the Commissioner (Appeals) rejected this argument, citing lack of evidence and the appellant's admission of the offense during the case detection.

The Commissioner (Appeals) emphasized the appellant's failure to provide documentary evidence supporting the job work claim. The appellant's contention of maintaining proper records was hindered by the seizure of documents. The Tribunal acknowledged the need for the appellant to substantiate their plea by producing records or relying on parallel records from the sister unit.

The Tribunal set aside the duty confirmation on sodium hypochloride, remanding the matter for fresh adjudication to allow the appellant an opportunity to present evidence. The decision highlighted the importance of natural justice in the process. The Tribunal upheld demands for other goods not disputed by the appellant, concluding the appeal accordingly.

In conclusion, the judgment addressed issues of illicit clearance, duty confirmation, and disputed duty payment for specific goods, emphasizing the need for proper evidence and adherence to natural justice principles in adjudication processes.