2015 (11) TMI 314 - AT - Central Excise

Duty demand - Shortage of goods - Clandestine removal of goods - violation of natural justice - Held that - There is no material coming up even today in the course of hearing from the appellant to discard the allegation of issuance of parallel invoices by the appellant to the four buyers as is stated in Sl. No. (ii) to (v) of para 1 appearing at the outset of this order to demonstrate that removal of the quantity of the goods to them had suffered duty. The JMD who was present on the spot on the date and time of investigation had no answer to the parallel invoices issued by appellant in respect of the alleged clearance to the buyers of the goods as above. Law mandates that what that is manufactured and cleared is to be accounted in the statutory record and anything cleared unaccounted not suffering excise duty is questionable. - there was an established case of issuance of parallel invoices by appellant with same numbers. Those were recovered from the four buyers aforesaid. That proved quantum of unaccounted transactions entered into between the appellant and those buyers. - At no point of time the appellant discarded the evidence gathered by investigation to defend against issuance of parallel invoice nor demolished the stand of investigation adducing any evidence to the contrary. Burden of proof was discharged by Revenue. Allegation of clandestine removal was established from cogent evidence and Revenue proved its case with precision without the adjudication being made under surmise or suspicion. Bureau of Indian Standard (BIS) has prescribed certain standard value in respect of goods manufactured in India. It would be proper if the matter goes back to adjudicating authority on this limited count of conversion of the quantity found into proper weight following the standard laid down by that Bureau to serve interest of justice. - Decided partly in favour of assessee.

Summary

Issues:
1. Allegation of shortage of raw materials
2. Clandestine removal of steel products to multiple buyers
3. Violation of natural justice during adjudication
4. Conversion of quantity into weight for alleged shortage
5. Time-bar defense for duty demands

Analysis:

Issue 1: Allegation of shortage of raw materials
The appellant disputed the demand of duty amounting to &8377;4,57,228 due to alleged shortage of ingots and billets. The penalty and interest were also imposed. The appellate authority confirmed this demand and granted a concession in penalty. The appellant argued that the conversion of quantity into weight was incorrect, causing prejudice. The Commissioner (Appeals) failed to provide a rational basis for the conversion, leading to a lack of evidence supporting the shortage.

Issue 2: Clandestine removal of steel products to multiple buyers
The remaining duty demand of &8377;8,80,037 arose from the clearance of steel products to various buyers, supported by the allegation of parallel invoices issued by the appellant. The appellate authority confirmed the duty demand and penalty, citing evidence of unaccounted transactions and clandestine removals. The appellant was granted a concession in penalty, as per the Tribunal's previous order, due to the denial of natural justice during the initial adjudication.

Issue 3: Violation of natural justice during adjudication
The appellant was initially deprived of natural justice during the adjudication process, leading to a remand by the Tribunal for a fresh hearing on limitation issues and penalty considerations. The appellate authority re-examined the case and confirmed the duty demand on certain items but allowed a concession in penalty. The appellant had already paid the duty liability and deposited the penalty amount.

Issue 4: Conversion of quantity into weight for alleged shortage
The defense plea regarding the alleged shortage of ingots and billets focused on the methodology used for conversion into weight. The Bureau of Indian Standard's guidelines were suggested for determining the shortage accurately. The matter was remanded to the adjudicating authority for a proper assessment based on the standard values prescribed by the BIS.

Issue 5: Time-bar defense for duty demands
The plea of time-bar defense was rejected, emphasizing that intentional evasion of duty nullifies the time limitation. The authority applied the Proviso to section 11A of the Central Excise Act, 1944, correctly. The plea of time-bar did not hold weight when there was evidence of intentional duty evasion.

In conclusion, the duty demand of &8377;8,80,037 was confirmed with a concessional penalty, while a limited remand was made for the duty demand of &8377;4,57,228 to reassess the alleged shortage. The appeal was disposed of accordingly, emphasizing the importance of following proper procedures and guidelines in excise duty matters.