2015 (10) TMI 1561 - AT - Central Excise

Duty demand - Seizure of goods - Undervaluation of goods - Non accounting goods - Reliance on diary of Production manager - Held that - Appellant cannot accept the diary on piecemeal basis. Once they have accepted the contents of the seized diary in respect of demand of duty of ₹ 5,75,062.00 tallying with finished goods register, it is the duty of the appellant company to justify the clearance of goods on the basis of the said diary on demand of ₹ 13,64,527.00, which they failed to do so. Hence, the demand of duty of ₹ 13,64,527.00 is justified. But, we find force in the submission of the Learned Advocate in respect of demand of duty of ₹ 5,75,062.00, as the lower authorities should have verified to documents as placed by the appellants. - appellants cleared the goods under the description of Second Grade Enameled Wires of Copper-SWG Mix Size . The Adjudicating Authority observed that the cartoons were indicating F or M for fine or medium type of goods. It was observed that the description the invoices were not tallying with the grade, size as mentioned in the production slip. We find that it is evident from the record that the appellant company cleared the goods, mix size, medium grade as mentioned in the invoices and cartoons, which were arising after the production stage. The material available on record would show that the goods cleared second quality. Thus, the finding of the Adjudicating Authority that these goods are not second quality is without any basis and the demand of duty is not proper. The penalty imposed on the appellant company and the dealer are to be determined as per outcome of the denove adjudication. In any event, the penalty imposed on the employees of the appellant company cannot be sustained for the reason that they worked on the basis of the instruction of the employer. There is no material available the employees of the appellant company had gained in any manner. - Decided partly in favour of assessee.

Summary

Issues:
1. Demand of duty, interest, and penalty on the appellant company and related individuals.
2. Confiscation of goods and imposition of penalties on the dealer and the appellant company.
3. Appeal against the orders of the Adjudicating Authority and Commissioner (Appeals).

Analysis:

Issue 1: Demand of duty, interest, and penalty on the appellant company and related individuals
The case involved the M/s Lark Wires & Infortech Ltd, engaged in manufacturing excisable goods. Central Excise Officers conducted a search and seized documents, leading to a Show Cause Notice proposing duty demand, interest, and penalties on the appellant company, its Director, employees, and a dealer. The Adjudicating Authority confirmed the duty demand and penalties. The Commissioner (Appeals) rejected the appeals, prompting the appellant company and others to file appeals.

Issue 2: Confiscation of goods and penalties on the dealer and the appellant company
Another Show Cause Notice was issued for confiscation of seized goods at the dealer's premises, proposing penalties. The Adjudicating Authority imposed penalties and upheld the order, leading to an appeal by the dealer. The Tribunal examined the demands based on seized diary entries and production registers, finding discrepancies in descriptions and justifications for duty demands. The penalties on employees were set aside due to lack of evidence of personal gain.

Issue 3: Appeal against the orders of the Adjudicating Authority and Commissioner (Appeals)
The Tribunal modified the impugned order, upholding certain duty demands while setting aside others. It directed the Adjudicating Authority to re-examine remaining demands and penalties on the appellant company and the dealer. Penalties on specific individuals were set aside, and the appeals by the appellant company and the dealer were allowed, with instructions for further adjudication.

In conclusion, the judgment addressed the duty demands, penalties, and confiscation issues, providing detailed reasoning for upholding certain demands while setting aside others. The Tribunal emphasized the need for thorough examination by the Adjudicating Authority and clarified the basis for setting aside penalties on specific individuals.