2008 (5) TMI 208 - AT - Central Excise

Chit was recovered from the drawer of Director showing clandestine removal of goods no explanation of the chit from assessee - goods cleared by them without payment of duty in the open market - raw material for the same was purchased from the local market on cash basis huge unaccounted quantum of imported raw material was also present in factory demand is sustainable but revenue plea for enhancement of penalty is rejected

Summary

Issues:
1. Confirmation of demand of duty of excise in respect of clandestinely cleared goods.
2. Demand of customs duty in respect of seized imported POY.
3. Imposition of penalties under Customs Act.
4. Appeal against confirmation of demand of interest and imposition of penalties under Customs Act.
5. Appeal against confirmation of demand of duty in case of clandestine removal.
6. Appeal for enhancement of penalty by Revenue.

Analysis:
1. The judgment dealt with the confirmation of demand of excise duty for goods cleared clandestinely. The assessee's factory was searched, revealing incriminating evidence, including a chit indicating goods cleared without payment of duty. The original adjudicating authority confirmed the excise duty demand, along with interest and penalties. The Commissioner (Appeals) observed sufficient corroboration for clandestine removal, upholding the duty demand but reducing the penalty imposed.

2. The case also involved the demand of customs duty for seized imported POY. The original authority confirmed the customs duty, interest, and penalties under the Customs Act. However, the Commissioner (Appeals) set aside the demand of interest and penalties, citing lack of evidence of smuggling. The Tribunal upheld the decision based on the procurement of raw material from the open market.

3. Regarding penalties under the Customs Act, the Commissioner (Appeals) overturned the imposition due to the appellant not being the importer of the goods. The Tribunal upheld this decision, referencing a lack of evidence of smuggling and reliance on a precedent decision.

4. The appeal against the confirmation of demand of duty in case of clandestine removal focused on the evidence presented, including the chit found in the director's drawer and unaccounted stock of raw material in the factory. The Tribunal rejected the appeal, emphasizing the lack of a plausible explanation for the incriminating evidence and the absence of proper record-keeping.

5. The Revenue's appeal for the enhancement of penalties was also addressed. The Commissioner (Appeals) had reduced the penalties, leading to the Revenue's appeal for an increase. The Tribunal found the penalty amount reasonable, being around 25% of the duty, and rejected the Revenue's appeal.

In conclusion, the Tribunal upheld the confirmation of duty demands related to clandestine removal and imported goods, while also addressing penalties imposed under the Customs Act. The decision was based on the evidence presented, lack of plausible explanations, and adherence to legal precedents. Both the assessee's and Revenue's appeals were rejected, and the judgment was pronounced on 29-5-2008.