2015 (10) TMI 1841 - AT - Central Excise

Clandestine removal of goods - discrepancy in RG-1 register - semi finished goods - It is the case of the appellant that all goods mentioned in the Blender register do not became ripe for clearances till the blended dye sample is approved by the customer. That in case of non approval the batch prepared is not cleared. It is also the case of the appellant that a new batch is prepared as per the desired quality of the customer either by improving the earlier batch or otherwise and earlier entry made in the Blender Register is struck-off. - Held that - that case of clandestine removal of S.O. Dyes by the main appellant is not sustainable as there is no evidence of clandestine removal of the goods calculated on the basis of entries made in the Blender register of the main appellant. - Decided in favour of assessee.

Summary

Issues:
Clandestine clearance of goods based on entries in Blender Register not reflected in RG-1 register.

Analysis:
The appeals were filed against the Order-in-Original (OIO) confirming a demand and penalty on the main appellant for alleged clandestine removal of goods. The main appellant, a manufacturer of Synthetic Organic Dyes (S.O. Dyes), argued that the goods mentioned in the Blender register were not meant for clearance until approved by customers. They contended that the entries in the Blender register were for internal processes and not for RG-1 register. The appellant also highlighted the lack of cross-examination of investigating authorities and relied on the case law of Abir Chemicals Limited vs. CCE, Surat to support their case.

The Revenue defended the order, emphasizing that the Dye intermediates should have been entered in the RG-1 register as per CESTAT observations in a previous case.

The key issue was whether the main appellant engaged in clandestine clearance of S.O. Dyes based on entries in the Blender Register not recorded in the RG-1 register. The appellant's argument was supported by the case law of Abir Chemicals Limited, which distinguished between fully finished goods and those requiring standardization as per customer specifications.

The Tribunal analyzed the case law and held that S.O. Dyes not standardized as per customer specifications, loosely packed in polythene bags, did not constitute RG-1 stage goods. The statements of the Technical Director did not admit clandestine clearance, and there was no concrete evidence supporting such allegations. The Tribunal concluded that the case of clandestine removal was not sustainable based on entries in the Blender register. Consequently, the appeals were allowed, and penalties were not imposed due to the favorable merits for the appellants.