2012 (10) TMI 926 - AT - Central Excise

Clandestine removal of goods - Discrepancy in RG-I register - Held that - no actual weighment was carried out by the officers. As such the said shortages were pseudo and not real. He submits that the appellant require a number of raw materials for manufacture of their final product. When there is no shortages in the other raw-materials, the shortages if any, in one of the raw material will not lead to the inevitable conclusion that the same has been cleared clandestine or has been utilized in the manufacture of the final product cleared without payment of duty - there was no intention on the part of the appellant to clear the goods clandestine, I am of the view that since there was admittedly non-maintenance of proper records penalty required to be imposed on the appellant - Decided in partly favour of assessee.

Summary

Issues: Alleged shortage of raw material, excess production of final product, confiscation of goods, duty demand, penalty imposition, appeal against order, non-accounting of goods, penalty justification.

Alleged shortage of raw material:
The appellant argued that no actual weighment was conducted by the officers, claiming the shortages were not real but pseudo. They contended that shortages in one raw material should not imply clandestine activity if other raw materials showed no shortages. The absence of evidence reflecting clearance of raw materials led to the Tribunal setting aside the demand of Rs. 26,263 against the appellant and the penalty imposed.

Excess production of final product and confiscation of goods:
The appellant stated that the seized final product had become unfit for consumption due to long storage and seizure, thus they were not interested in redeeming it. They argued that without evidence of goods meant for clandestine removal, the penalty of Rs. 7,38,443 was unjustified. The Tribunal agreed that shortages alone were insufficient to prove clandestine activity and set aside the penalty and demand of Rs. 26,263.

Duty demand and penalty imposition:
The show cause notice proposed the duty demand of Rs. 7,38,443 for excess final product and Rs. 26,263 for shortages of flavor, along with penalties. The Commissioner (Appeals) upheld the duty demand and penalty, except for the penalty on one individual, leading to the present appeal. The Tribunal found no intention to clear goods clandestinely, thus no duty demand was confirmed, and no penalty was imposed due to the appellant's decision not to redeem the goods.

Non-accounting of goods and penalty justification:
The issue of non-accounting of goods was addressed by citing previous Tribunal decisions where penalties were not justified without evidence of clearance without duty payment. The Tribunal imposed a penalty of Rs. 2000 on the appellant for non-maintenance of proper records but allowed the appeals, considering no intention for clandestine clearance. The judgment highlighted the importance of evidence and intention in determining duty demands and penalties.

This detailed analysis of the judgment covers all the issues involved and provides a comprehensive understanding of the legal proceedings and decisions made by the Tribunal.