2017 (3) TMI 545 - AT - Central Excise

Clandestine removal - shortage of stock - Held that - No instance of any removal of goods, found to be shortage, has been adduced by the authority. No buyer of goods or evidence of removal such as, transportation of goods, receipt of consideration is appearing on record nor there seems to be any investigation on this account. In such case, only on the basis of acceptance of shortages by Shri R.S Tomar, who is employee of Appellant company, the duty demand cannot be upheld. As regard confiscation of seized cash and appropriation thereof against the demand, we find that the Commissioner has confirmed confiscation merely on ground of preponderance of probabilities, stating that the amount is of sale proceeds of short found goods - no investigation has been done to link the said cash with any receipt of clandestine removal - confiscation set aside. As regard imposition of penalties against Shri R.S. Tomar, Shri Deepak Gupta, Shri Anant S. Sheth and Shri T. Rama Rao, since the demand against M/s SKS Ispat does not survive, therefore no case for penalty is made out against the said persons. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Central Excise duty demand based on shortage of finished goods.
2. Confiscation of seized cash.
3. Imposition of penalties on specific individuals.

Central Excise Duty Demand:
The case involved discrepancies in stock found during a visit by Central Excise Officers, leading to a demand for duty payment and confiscation of seized cash. The Appellant argued that shortages were due to stock recording methods, not clandestine removal. The Commissioner upheld the duty demand based on an employee's admission of shortages. However, the Tribunal found no evidence of clandestine removal and cited previous judgments to support its decision. They concluded that duty demand solely on shortages, especially when minor and recorded on estimation basis, was unjustified.

Confiscation of Seized Cash:
The Commissioner ordered cash confiscation, alleging it as proceeds from unaccounted goods. The Tribunal disagreed, noting lack of evidence linking the cash to clandestine activities. They emphasized the Appellant's proper accounting and lack of proof of cash being from illicit sources. The Tribunal ruled that absolute confiscation of cash was legally unsustainable, especially without concrete evidence of its illicit origin.

Imposition of Penalties:
Penalties on specific individuals were linked to the duty demand against the company. As the duty demand was set aside, the Tribunal ruled no basis for penalties against the individuals. They emphasized that without a valid duty demand, penalties against the individuals could not be upheld. Consequently, all penalties were set aside in line with the decision on the duty demand.

In the final judgment, the Tribunal set aside the duty demand, confiscation of cash, and penalties imposed on individuals, providing consequential reliefs. The decision was based on the lack of evidence supporting clandestine activities and the discrepancies in stock recording methods. The judgment highlighted the importance of concrete proof before imposing duty demands, confiscations, or penalties in excise matters.