2017 (12) TMI 330 - AT - Central Excise

Clandestine manufacture and removal - records of wastages - non-recording of actual production figures - Held that - Though it is indeed surprising why production reports of a kind not relevant for the end product were kept, if 25% wastages were to be generated subsequent to that stage of operation. No professionally managed Company will keep records where there is no wastage, especially of steel coil, and will definitely keep records of & at wastage points to collect the data and steady reason and reduce such wastage - The admission of the officers of the assessee that dispatch figures were recorded and not actual product figures in the RG 1, itself leads to the establishment of the charge that Actual production figures was not recorded and dispatch figures in this case are doubtful. Therefore, it can be established that actual production has not been recorded. Such actual production is not found in the factory, there is established charge of removal of set on invoices - charge of unaccounted production and its clandestine removal is thus established. The Tribunal had upheld the charges of removal of goods but remanded only on limited aspect of reworking of demand and the above findings of the Tribunal was not challenged before higher forum by the assessee - the re-quantification of demand cannot be undertaken at this stage since it involves the detail inspection of the records and documents. Further the modvat aspect for the purpose of quantification has also to be looked into. It is appropriate to remand the case back to the adjudication authority for limited purpose of quantification - appeal allowed by way of remand.

Summary

Issues:
Cross appeals filed by M/s Vidyut Metallics Pvt. Ltd., Production Manager, Excise officer, and revenue against an order passed by the Commissioner of Central Excise. The main issues include confirmation of demand/penalties, evasion of duty, unaccounted production, overlapping demands, penalty imposition, and valuation discrepancies.

Analysis:
1. Confirmation of Demands and Penalties:
The case involved allegations of evasion of duty by M/s Vidyut Metallics Pvt. Ltd. (VML) through unaccounted production and clearance of Cold Rolled Stainless Steel Strips (CRSS) using duplicate invoices. The adjudicating authority confirmed demands totaling &8377; 47,41,005 and imposed penalties on VML and individuals. The Tribunal partially upheld the demands but remanded the case for reworking the demand and penalty, keeping the valuation issue open.

2. Allegations of Evasion and Unaccounted Production:
The Tribunal found discrepancies in the production records and RG-1 entries of VML, indicating unaccounted production and clandestine removal of goods. The Tribunal noted the absence of production reports for crucial stages and questioned the credibility of the defense's claims. The charges of unaccounted production and removal were established based on the discrepancies found.

3. Overlapping Demands and Requantification:
The Tribunal recognized an overlap in demands for unaccounted production and clandestine removal during different periods. It directed the reworking of demands to rectify the overlap and remanded the case for quantification without expressing a final opinion. Both parties were instructed to provide relevant documents for the adjudicating authority to determine the duty and penalties accurately.

4. Revenue Neutrality and Merits of the Case:
The appellant argued for revenue neutrality due to the duty payment and modvat credit availed by jobworkers and VML. They contended that no clandestine removal occurred, citing the revenue-neutral nature of the transactions. The Tribunal, however, found the defense lacking grounds and upheld the charges based on the discrepancies in production and dispatch records.

5. Remand and Disposal of Appeals:
Ultimately, the Tribunal disposed of all appeals by remanding the case to the adjudicating authority for reworking the demands and penalties based on the quantification of duty. The parties were directed to cooperate in providing necessary documents for a fair determination. The judgment was pronounced on 30/11/2017 by the Tribunal in Mumbai.

In conclusion, the judgment addressed various issues related to duty evasion, unaccounted production, overlapping demands, and penalty imposition, emphasizing the need for accurate quantification and reworking of demands based on the evidence presented. The remand to the adjudicating authority aimed to ensure a fair assessment of duty liabilities and penalties in the case.