2014 (12) TMI 367 - AT - Central Excise

Waiver of pre deposit - Clandestine removal of goods - Discrepancy in RG-1 register - Held that - Revenue s allegation of clandestine manufacture and clearance are based upon mainly the installed capacity as disclosed by one of the deponent employee, read with the entries made in various records, resulting in theoretical calculations of production. There is virtually no evidence of procurement of excess raw material, conversion of the same into final product, clearance of the same through transporters and identification of the buyers and the consequent flow of money from the buyers to the appellants. It is well established, by catina of judgment that the allegations of clandestine removal cannot be upheld on the basis of surmises and conjunctures and are required to be established by production of positive and tangible evidence. In the present case, we do not even find, prima facie, preponderance of probabilities to conclude the allegations of clandestine removal against the assessee. - Following decision of Sagarika Acoustronics Pvt. Ltd. vs. Union of India reported in 2007 (3) TMI 723 - Supreme Court of India - Stay granted.

Summary

Issues:
- Duty demand confirmation against M/s Triveni Glass Ltd.
- Imposition of penalties on various individuals related to M/s Triveni Glass Ltd.
- Allegations of clandestine manufacture and clearance.
- Violation of natural justice.
- Financial hardship plea by the appellant.

Duty Demand Confirmation and Penalties:
The judgment addresses the duty demand confirmation of approximately Rs. 20.95 crores against M/s Triveni Glass Ltd., along with penalties imposed on the Managing Director, Deputy Managing Director, and employees. The Commissioner's order confirming the demand and penalties was challenged before the Tribunal, which set it aside due to a violation of natural justice. The matter was remanded to the Commissioner for fresh adjudication, where despite a detailed reply from the appellant, the demand and penalties were upheld, leading to the present appeal.

Allegations of Clandestine Manufacture and Clearance:
The Revenue alleged clandestine manufacture and clearance of final products by M/s Triveni Glass Ltd. based on theoretical calculations of excess production. The Revenue's approach of relying on the maximum installed capacity disclosed by an employee was deemed inappropriate by the Tribunal. The Tribunal found discrepancies in the Revenue's calculations and noted that there was no concrete evidence of excess raw material procurement, conversion, clearance, or buyer identification. The Tribunal emphasized the need for tangible evidence to support allegations of clandestine removal, which was lacking in this case.

Violation of Natural Justice:
The Tribunal highlighted a violation of natural justice in the Commissioner's order, leading to its setting aside and remand for fresh adjudication. The appellant's detailed reply during the remand proceedings was not favorably considered by the Commissioner, resulting in the confirmation of duty demand and penalties. The Tribunal's analysis focused on the procedural fairness and adherence to natural justice principles in the adjudicatory process.

Financial Hardship Plea:
Considering the appellant's plea of financial hardship, as the company had been declared a sick company by the BIFR, the Tribunal referred to a relevant Supreme Court decision. The Tribunal acknowledged the financial difficulties faced by the appellant and cited the Supreme Court case of Sagarika Acoustronics Pvt. Ltd. vs. Union of India as appropriate in this context. This plea, along with the lack of substantial evidence supporting the allegations, influenced the Tribunal's decision to dispense with the pre-deposit condition of dues in all stay petitions unconditionally.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT NEW DELHI reflects the considerations of duty demand confirmation, penalties, allegations of clandestine activities, procedural fairness, and financial hardship, providing a comprehensive overview of the legal issues involved and the Tribunal's decision-making process.