2018 (2) TMI 557 - AT - Central Excise

Clandestine removal - re-quantification of demand - Held that - at the relevant time the appellant was engaged in the manufacture of recorded audio cassettes - As per N/N. 48/1994 dated 01/03/1994 (Sr. No. 4) recorded audio cassettes attracts nil rate - Similarly in the N/N. 16/96-CE dated 23/07/1996 (sr. No. 105) recorded audio cassettes attracts nil rate of duty - When it attracts nil rate the appellant is entitled to get this benefit - matter remanded to the adjudicating authority once again to give the benefit pertaining to the duty on audio recorded cassettes. Remaining order is hereby sustained, although during the course of arguments the Learned Counsel vehemently argued about trading activities but from the records, it was not proved. The raw materials for which claim was made as a trading item in fact was used by the appellant for captive consumption. Exchange of the bills between two parties has nothing to do with the trading activities. In view of above the remaining portion of the order is hereby sustained. Appeal allowed in part by way of remand.

Summary

Issues:
1. Appeal against Order-in-Original No: 23//06 dated 05/10/2006
2. Clandestine removal case based on search conducted at business premises
3. Re-quantification of demand by adjudicating authority
4. Dispute regarding duty on recorded audio cassettes
5. Allegations of trading activities and captive consumption of raw materials

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai was lodged against Order-in-Original No: 23//06 dated 05/10/2006. The case stemmed from a search conducted at the appellant's business premises, leading to suspicions of clandestine removal. Following a remand by CESTAT, the adjudicating authority re-quantified the demand based on the tribunal's directive. Despite the appellant's contention of errors in the calculation, the tribunal's interim order mandated a re-quantification, which was carried out but deemed unsatisfactory by the appellant, prompting the current appeal.

During the proceedings, it was revealed that the appellant was involved in manufacturing recorded audio cassettes. Notifications No. 48/1994 and No. 16/96-CE specified a 'nil' rate of duty for recorded audio cassettes, entitling the appellant to this benefit. Consequently, the tribunal modified the impugned order and remanded the matter to the adjudicating authority to ensure the appellant receives the duty benefit on audio recorded cassettes. However, the tribunal upheld the remaining aspects of the order, dismissing claims of trading activities as the raw materials were utilized for captive consumption, not for trading purposes, as evidenced by the bill exchanges between parties.

Ultimately, the appeal by the appellants was partly allowed, specifically for the purpose of re-quantifying the demand concerning audio cassettes. The tribunal directed the extension of benefits as per the Commissioner's remand report dated 28/09/2017. The decision highlighted the importance of correctly applying duty benefits and distinguishing between trading activities and captive consumption, culminating in the partial allowance of the appeal with specific instructions for further proceedings.