2013 (9) TMI 721 - AT - Central Excise

Clandestine removal of goods - 100% EOU - date of Debonding - Penalty u/s 11AC - Short payment of duty - Higher quantity of goods cleared - Held that - date 14.8.2007 is not an arbitrary date and the applicant has to account goods for the prior period and it cannot be accounted by showing clearance after the said date. Further, I also agree with his argument that the case has to be seen not having regard to how many pieces of evidences are there but with reference to quality of the evidence available. Though in this case only one piece of evidence is produced but that has very strong force - prima facie case is against the assessee - stay granted partly.

Summary

Issues:
1. Duty demand on finished goods cleared without payment.
2. Comparison of registers for quantity discrepancy.
3. Validity of chosen cut-off date.
4. Reliability of evidence for clandestine removal.

Analysis:
1. The case involved a duty demand of Rs.12,15,018/- along with interest and penalty under Section 11AC of the Central Excise Act, 1944 due to alleged clearance of finished goods without payment of duty. The appellant, engaged in manufacturing TPR/PVC soles for footwear, had employed a contractor for inventory maintenance. The discrepancy in finished goods quantity led to the show-cause notice and subsequent appeal.

2. The appellant argued that the Revenue's selection of the period from 1.4.2007 to 14.8.2007 was arbitrary. The comparison of registers for the extended period till December 2007 showed matching quantities with minor differences. The appellant contended that besides the contractor's register, no other evidence supported the Revenue's claims of unaccounted sales. The appellant sought admission of the appeal without predeposit.

3. The Revenue opposed the appellant's plea, highlighting the significance of the de-bonding from EOU status on 14.8.2007. The Revenue justified the chosen cut-off date as crucial for distinguishing duty liabilities pre and post de-bonding. Emphasizing the quality over quantity of evidence in clandestine removal cases, the Revenue asserted the reliability of the contractor's maintained records as crucial evidence.

4. The Tribunal, after considering both arguments, found merit in the Revenue's stance regarding the non-arbitrary nature of the cut-off date. Acknowledging the importance of quality evidence in such cases, the Tribunal deemed the contractor's records, relied upon by the Revenue, as strong evidence. Consequently, the Tribunal ordered a predeposit of Rs.3,00,000/- for appeal admission, with a waiver of the balance dues pending appeal, subject to compliance by a specified date.

This detailed analysis encapsulates the key issues, arguments presented by both parties, and the Tribunal's decision based on the evidence and legal principles involved in the judgment delivered by the Appellate Tribunal CESTAT CHENNAI.