2018 (1) TMI 634 - AT - Central Excise

Clandestine removal - shortage of Calcium Carbonate which is an input - difference between daily production register (profit register) and daily stock register (RG-1 statutory register) - demand on the basis of consignment notice - penalty - redemption fine - Held that - issue as regards the demand of the duty of inputs and finished goods allegedly manufactured and cleared clandestinely during excess August 1, 67, 117/- on the goods allegedly removed clandestinely on the basis of two consignment notes I find that the Revenue has been able to establish this demand - demand upheld. Confiscation - redemption fine - Held that - I do not find that the said confiscation need not be upheld as there is nothing on records to indicate that the appellant had intention to remove the said goods clandestinely. In the absence of any such evidence in my view the confiscation of the goods needs to be set aside and I do so. Penalty - Held that - the penalties imposed on the main appellant the penalty of 1, 67, 117/- under Section 11AC needs to be upheld on the findings as recorded herein above while other penalties have to be set aside and I do so - as regards the penalty imposed on Sh. K. D. Agarwal the other appellant there is nothing on records to show that he needs to penalized under Rule 26 of the Central Excise Rule 2002. Accordingly the penalty imposed on Sh. Agarwal is set aside. Appeal allowed in part.

Summary

Issues:
1. Demand of excise duty on shortage of Calcium Carbonate, clandestinely manufactured goods, and goods removed clandestinely.
2. Equivalent penalties on the company and the director.
3. Confiscation of excess finished goods.
4. Validity of demands and penalties imposed.

Analysis:
1. The issue involved demands of excise duty on shortage of Calcium Carbonate, clandestinely manufactured goods, and goods removed clandestinely. The appellant argued that the demand was unsustainable due to lack of evidence supporting clandestine activities. The Revenue relied on voluntary admissions by the company's director. The tribunal found the demand for excise duty on inputs unsustainable as there was no evidence of manufacturing by the appellant. Regarding clandestinely manufactured goods, the tribunal noted discrepancies in production figures but found insufficient evidence to prove clandestine activities, following precedents.

2. The issue of equivalent penalties on the company and the director was considered. The tribunal upheld a penalty on the company but set aside other penalties due to lack of evidence. The penalty on the director was also set aside as there was no evidence to support it under the Central Excise Rule 2002.

3. The confiscation of excess finished goods was examined. The tribunal found no evidence of intent to remove goods clandestinely, leading to the decision to set aside the confiscation.

4. The validity of demands and penalties imposed was thoroughly analyzed. The tribunal dismissed demands for excise duty on inputs and clandestinely manufactured goods due to lack of conclusive evidence. However, a demand for goods removed clandestinely was upheld based on transporter statements. Penalties on the company and the director were selectively upheld or set aside based on the evidence presented. The tribunal's decision was pronounced on 09.01.2018, disposing of the appeals accordingly.